Tourism,trade and growth: the case of Cyprus

Although the relationship between international trade and economic growth has found a wide application area in the literature over the years, this can not be said about tourism and growth or trade and tourism. This study employs the bounds test for cointegration and Granger causality tests to investigate a long-run equilibrium relationship between tourism, trade and real income growth, and the direction of causality among themselves for Cyprus. Results reveal that tourism, trade and real income growth are cointegrated; thus, a long-run equilibrium relationship can be inferred between these three variables. On the other hand, Granger causality test results suggest that real income growth stimulates growth in international trade (both exports and imports) and international tourist arrivals to the island. Furthermore, growth in international trade (both exports and imports) also stimulates an increase in international tourist arrivals to Cyprus. And finally, real import growth stimulate growth in real exports in the case of Cyprus.     

Export-led growth: the case of the Slovenian and Estonian economies

The export-led growth hypothesis is investigated in the case of the two small, open and export-oriented Slovenian and Estonian economies. The Johansen cointegration test and Granger causality test were applied to investigate the relationship between the time series variables for export, import and gross domestic product (GDP). The results reveal evidence to support the export-led growth hypothesis in both economies. The Granger causality relationship is found between export growth and economic (GDP) growth for both countries. Slovenia and Estonia can enhance economic growth by providing a better enabling environment for exporters and by market expansion.     

The export-output growth nexus in Japan: a bootstrap rolling window approach

The purpose of this article is to examine the export–output nexus in Japan by taking into account the time variation in the causal link with bootstrap Granger non-causality test and rolling estimation. The data used cover the seasonally adjusted real export and real Gross Domestic Product (GDP) for the 1957:1–2009:1 period. Standard Granger causality tests indicate no causality between export and real GDP series. On the contrary, full sample-modified Granger causality tests based on bootstrap, which are applicable irrespective of integration–cointegration properties of the data, indicate a bi-directional causal link between exports and real GDP. Accordingly, export growth should be an important factor behind Japan’s high-economic growth in the last three decades. Using parameter stability tests, we show that these results are not uniform for different sample periods and results vary due to structural changes. Using bootstrap rolling window estimation, we find that there is a positive bi-directional predictive power from the mid 1970s to the late-1980s between the series, while from the late 1990s to 2009 there is a positive predictive power only from export growth to output growth.     

ON EXPORT-LED GROWTH IN AUSTRALIA AND CANADA: COINTEGRATION, CAUSALITY AND STRUCTURAL STABILITY*

This paper uses cointegration and vector-error correction (VEC) modelling to investigate whether the export-led growth hypothesis applies to Australian and Canadian exports and labour productivity. The Johansen (1988) procedure is used to test whether manufacturing and aggregate measures of exports and labour productivity are cointegrated. Exports and labour productivity are found to be cointegrated, suggesting the export-led growth hypothesis holds for the small, open Australian and Canadian economies, although the estimated cointegrating vectors suggest the relationship is of small order. The tests suggested in Hansesn (1992), for parameter stability in relationships with I(1) variables, are estimated to examine if the parameters estimated from the Johansen procedure are unstable and whether the null of cointegration can be rejected in favour of structural change. No evidence is found of parameter instability in either the Australian or Canadian long-run relationships at conventional significance levels. Estimation of VEC models suggests that exports are seen to cause productivity growth, although the quantitative impacts are again small. The reverse causality is rejected for both countries, except for the Canadian manufacturing sector for which there is a small, significant positive effect of labour productivity on manufactured exports.     

Exports,investments and economic development of pre-accession countries of the European Union: an empirical investigation of Bulgaria and Romania

This paper attempts to analyse the relationship between exports, investments and economic development in two pre-accession countries of the European Union, Bulgaria and Romania. For investigation of this relationship a multivariate autoregressive VAR model is used. The results of cointegration analysis showed that there is one cointegrated vector among exports, investments and economic growth for the two countries. Granger causality tests based on error correction models (ECM) indicated that there is a ‘strong Granger causal’ relation between economic growth and exports as well as between investments and exports for the two countries. In addition, economic development and capital accumulation in an economy seem to have just as much of an influence on exports as exports have on capital accumulation and economic development.     

The engine of growth or its handmaiden?

This paper presents an analysis of time-series data for the countries in the Summers-Heston (1991) data set, in an attempt to ascertain the evidence for or against the export-led growth hypothesis. We find that standard methods of detecting export-led growth using Granger-causality tests may give misleading results if imports are not included in the system being analyzed. For this reason, our main statistical tool is the measure of conditional linear feedback developed by Geweke (1984), which allows us to examine the relationship between export growth and income growth while controlling for the growth of imports. These measures have two additional features which make them attractive for our work. First, they go beyond meredetection of evidence for export-led growth, to provide a measurement of itsstrength. Second, they enable us to determine the temporal pattern of the response of income to exports. In some cases export-led growth is a long-run phenomenon, in the sense that export promotion strategies adopted today have their strongest effect after eight to 16 years. In other cases the opposite is true; exports have their greatest influence in the short run (less than four years). We find modest support for the export-led growth hypothesis, if “support” is taken to mean a unidirectional causal ordering. Conditional on import growth, we find a causal ordering from export growth to income growth in 30 of the 126 countries analyzed; 25 have the reverse ordering. Using a weaker notion of “support”—stronger conditional feedback from exports to income than vice versa, 65 of the 126 countries support the export-led growth hypothesis, although the difference in strength is small. Finally, we find that for the “Asian Tiger” countries of the Pacific Rim, the relationship between export growth and output growth becomes clearer when conditioned on human capital and investment growth as well as import growth.     

Causality Between Exports and Economic Growth: What do the Econometric Studies Tell Us?

This paper contains an assessment of major econometric studies that have estimated the causality between exports and economic growth. These studies have used a variety of methodological approaches, such as Granger causality, cointegration with multivariate error correction models, exogeneity and structural invariance, VAR models with variance decomposition, and impulse response functions. The assessment in this paper refers both to the methodologies employed as well as to the empirical findings. A major conclusion is that empirical support for the export‐led growth in both the developed and the developing countries is considerably weaker than was estimated on the basis of earlier correlation and production function studies.     

Are imports and remittances cointegrated for the Central and Eastern European countries?

In this article, we investigate the existence of long-run common trends between imports and remittances in 11 Central and Eastern European countries which are part of the European Union. Using the Engle–Granger two-step procedure, we determine that for all countries in our sample there are no long-run common trends (no cointegration) between imports and remittances. However, the results are mixed when running a Granger causality test. For nine countries, we can establish either a bidirectional or unidirectional Granger causality, indicating that past values of one variable have predictive content on the other variable. In two countries, there is no Granger causality between imports and remittances.     

Coffee exports and industrialization in Brazil

We investigate the dynamic relationship between coffee exports and machinery imports in Brazil from 1869 to 1939. Our tests reveal cointegration and bidirectional causality in the temporal sense. This evidence suggests that foreign exchange real revenues from coffee exports were important for the onset of industrialization, as machinery imports proxy for real investment demand. Capital growth, in turn, also helped to boost the country’s exports.     

Causality Between Exports and Economic Growth: The Empirical Evidence from Shanghai

The export-led growth hypothesis is tested using monthly time series data for Shanghai (one of the major exporting provinces in China) using the Granger no-causality procedure developed by Toda and Yamamoto (1995) in a vector autoregresion (VAR) model. This paper builds on the existing literature in three distinct ways. This is the first study of the export-led growth hypothesis which employs a regional dataset (Shanghai). Second, the paper follows Riezman et al . (1996) in controlling for the growth of imports to avoid a spurious causality result; and finally, the use of the methodology by Toda and Yamamoto is expected to improve the standard F -statistics in the causality test process. The research finds one-way Granger causality running from GDP to exports     

Mexico's Economic Growth and the Balance of Payments Constraint: A cointegration analysis

This paper applies the basic balance-of-payments constraint model (BPCmodel), developed by A.P. Thirlwall, to the analysis of Mexico's economic growth in 1950-96.With the use of unit-root tests and cointegration analysis it estimates the long-run association between the growth of Mexico's real exports and real output in 1950-96, and selected subperiods. The results tend to show significant and positive cointegration between these two variables, thus giving support to the BPC-model as a relevant hypothesis to explain Mexico's long-term economic growth. Moreover, the findings of cointegration tests for selected subperiods suggest that the slowdown in its economic growth since 1982 is associated with an increase in the long-term income elasticity of imports that made more binding the balance-of-payments constraint on the expansion of domestic output.     

How productivity and domestic output are related to exports and foreign output in the case of Sweden

In this paper we examine the relationships between two sets of three variables: Swedish real exports, Swedish real GDP, and foreign real GDP in one set; and Swedish real exports, Swedish total factor productivity, and foreign real GDP in the other set. The foreign real GDP facing Sweden is proxied by total OECD real GDP minus Sweden's real GDP. Multivariate tests for integration and cointegration show that the variables in each model are cointegrated. We also perform Granger causality tests on these variables in our examination using the Toda-Yamamoto procedure. We discover bi-directional causality between Swedish real exports and Swedish real GDP (or Swedish total factor productivity). Foreign real GDP is shown to Granger cause Swedish real exports, but no significant causation of foreign real GDP on either domestic GDP or total factor productivity was found. A change in foreign real GDP thus appears to affect Swedish output and productivity only indirectly, through changes in Swedish exports. JEL classification:F41, F43, C30, C32     

Intertemporal sustainability of current account imbalances: New evidence from the OECD countries

This study estimates the intertemporal model for the relationship between exports and imports and examines the sustainability of current account deficits (CADs) and the validity of intertemporal budget constraint for 24 Organisation for Economic Co‐operation and Development countries. The standard ordinary least squares (OLS)‐based two‐step Engle and Granger test, the cointegration regression Durbin–Watson (CRDW) test, and the Stock–Watson test performed on the one‐regime model with time‐invariant parameters and no structural break provide mixed support for the presence of cointegration between exports and imports. The recursive least squares‐based cumulative sum of recursive residuals (CUSUM) and the cumulative sum of squares of recursive residuals (CUSUMSQ) tests and the OLS‐based Andrews‐Quandt (AQ) and Andrews – Ploberger (AP) tests suggest the presence of structural breaks in the long‐run relationship between exports and imports for a number of countries. The end‐of‐sample new cointegration breakdown tests performed on the OLS, fully modified OLS, and full‐information maximum‐likelihood estimates of the model suggest the presence of cointegration between exports and imports for most countries. The dominant support for cointegration between trade flows points toward the sustainability of CADs and the validity of intertemporal budget constraint. The macroeconomic stabilization policies seem to have been effective in correcting the market failures and maintaining the steady‐state equilibrium relationship between trade flows in the sample countries. The findings of this study have important implications for empirical research. The structural breaks in the cointegrating vector could occur even over the short time periods and at any point in time. It is essentially important to assess the sustainability of the external position in the presence of long‐period as well as short‐period breaks in the cointegrating vector.     

Is there an export or import-led productivity growth in rapidly developing Asian countries? a multivariate VAR analysis

In contrast to cross-country studies, the paper investigates the relationships between trade and labour productivity for nine rapidly developing Asian countries in a time-series framework using a vector error-correction model. Independent tests on the long-run and short-run relationship between trade variables of exports and imports and productivity are conducted. The results suggest that trade has an important impact on productivity and output growth in the economy, however it is imports that provide the important?‘virtuous’?link between trade and output growth. The results indicate that exports and imports have qualitatively different impacts on labour productivity. The long-run result shows that there is no causal effect from exports to labour productivity growth for Hong Kong, Indonesia, Japan, Taiwan and Thailand; thereby suggesting that there is no export-led productivity growth in these countries. However, significant causal effects were found from imports to productivity growth, suggesting import-led productivity growth in India, Indonesia, Malaysia, Philippines, Singapore and Taiwan. In addition, the results indicate that imports tend to have greater positive impact on productivity growth in the long run.     

对中国国际贸易与FDI相互关系的重新检验

This paper studies the long-term relationship between FDI and imports and exports through evidence from China by using cointegration technology, and the Granger causality test shows that FDI had an obvious effect on imports and exports activities of foreign firms, and in the meantime, the imports and exports of foreign firms greatly promoted FDI. However, there is not a stable equilibrium between FDI and international trade in the long run for all firms in China. This paper provides some explanations for the possible reasons that cause the above difference in estimation results from the perspectives of both location and industry factors.      

Foreign Direct Investment Inflows and Economic Growth: The Case of Korea

The current study examines the relationship between FDI inflows and economic growth of Korea and tests the Bhagwati hypothesis which says that FDI inflow is more beneficial to economic growth in an open trade regime in a multivariate framework. Unlike previous works on the concerned hypothesis, a small‐sample cointegration test is applied to the time‐series data. There is no evidence of cointegration among the variables. The Granger causality test results show that, although FDI inflows do not cause per capita real GDP, the latter is revealed to cause the former when the economic crisis dummy variable is included. There is a unidirectional short‐run causality from domestic investment to per capita real GDP growth rate. The case of Korea does not support the Bhagwati hypothesis.     

A further examination of the export-led growth hypothesis

This article challenges the common view that exports generally contribute more to GDP growth than a pure change in export volume, as the export-led growth hypothesis predicts. Applying panel cointegration techniques to a production function with non-export GDP as the dependent variable, we find for a sample of 45 developing countries that: (i) exports have a positive short-run effect on non-export GDP and vice versa (short-run bidirectional causality), (ii) the long-run effect of exports on non-export output, however, is negative on average, but (iii) there are large differences in the long-run effect of exports on non-export GDP across countries. Cross-sectional regressions indicate that these cross-country differences in the long-run effect of exports on non-export GDP are significantly negatively related to cross-country differences in primary export dependence and business and labor market regulation. In contrast, there is no significant association between the growth effect of exports and the capacity of a country to absorb new knowledge.     

Multilateral trade and export-led growth in the world economy: some post-war evidence

In this paper, we address an empirical question: is there evidence to substantiate the assumption that the post-war liberalization of world trade has actually led to a significant increase in the world GDP? In our attempt to answer that question, time series data in the Penn World Table 6.1 are aggregated across countries to obtain a measure of world trade and output, and the total number of GATT/WTO member countries is employed as an explanatory variable to account for the impact of multilateral trade agreements, such as the Kennedy Round, Tokyo Round, and the Uruguay Round, on the trade-growth nexus. We then examine the relationship between world trade and the post-war GDP per worker across the world through the multivariate cointegration and error correction modeling and the Granger causality test. The results suggest that, at the global level, the post-war liberalization of multilateral trade has promoted both GDP and trade activities. There is also evidence that supports the export-led growth hypothesis in the world economy.     

On the Causality between Export Growth and GDP Growth: An Empirical Reinvestigation

Although conventional wisdom suggests that export growth contributes positively to economic growth, empirical studies on the causal links between exports and output have provided little support for the exportled growth hypothesis. This paper reexamines the direction of causation by handling properly two important issues in causality tests: the characteristics of the data, and the choice of optimal lags. The results of this study show that in a sample of 32 economies, the export-led hypothesis is supported by 17 economies and is strongly supported by 9 economies.     

Exports,Imports and Income in Taiwan: An Examination of the Export Led Growth Hypothesis

Cointegration and vector autoregression are used to examine relationships among exports, imports, and income in Taiwan from 1971 to 1995. These three series are cointegrated. There is bidirectional Granger causality between exports and imports, and between imports and income. Impulse responses and variance decompositions uncover only weak links from exports to income. The export led growth hypothesis is not supported for Taiwan during this period of rapid growth. [F1, F4, O0]