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     

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.     

Export and Income Growth in Japan and Taiwan

Economic theory suggests that export growth promotes economic growth. Yet empirical research has not found clear support for the export-led growth hypothesis, even for the newly industrialized economies where the theory should be most applicable. This paper provides an explanation for the apparent discrepancy between the theory and the empirical results. It shows that causality inferences on the export-led growth hypothesis are sensitive to unit roots or near-unit roots in the time series and to the lag structure chosen for causality tests. Therefore, the issues of unit root and lag structure deserve scrutiny in empirical research.     

Export-led Growth in South Asia: A Panel Cointegration Analysis

Abstract

In this paper, we attempt to examine the export-led and manufacturing export-led growth hypothesis for four South Asian Countries; namely, India, Pakistan, Bangladesh and Sri Lanka, using Pedroni’s panel cointegration technique for the period 1980–2002. In this context we estimate growth accounting equations to investigate the impact of exports, manufacturing exports and other important physical and human capital variables on both total GDP and non-export GDP. The study finds long-run equilibrium relationship between GDP (and non-export GDP) and exports along with other variables supporting export-led growth hypothesis. The results also substantiate the existence of manufacturing export-led growth hypothesis. Further, we find that export, fixed capital formation, public expenditure on health and education have statistically significant coefficients re-emphasizing the importance of these variables for higher economic growth.     

An Analysis of Exports and Growth in India: Cointegration and Causality Evidence (1971–2001)

The relationship between exports and economic growth has been analysed by a number of recent empirical studies. This paper re‐examines the sources of growth for the period 1971–2001 for India. It builds upon Feder's (1983 ) model to investigate empirically the relationship between export growth and GDP growth (the export led growth hypothesis), using recent data from the Reserve Bank of India, and by focusing on GDP growth and GDP growth net of exports. We investigate the following hypotheses: (i) whether exports, imports and GDP are cointegrated using the Johansen approach and Breitung's nonparametric cointegration test; (ii) whether export growth Granger causes GDP growth; (iii) and whether export growth Granger causes investment. Finally, a VAR is constructed and impulse response functions (IRFs) are employed to investigate the effects of macroeconomic shocks.     

Export-led Growth and Import Compression: Further Time Series Evidence From LDCs

This paper conducts tests of the export-led growth and the import-compression hypotheses for four less developed countries (LDCs) – India, Nigeria, Fiji and Papua New Guinea (PNG). Based on Johansen's multiple cointegration test preceded by unit root tests, we test for cointegration between real output, exports and imports. Non-rejection of cointegration between the variables excludes the possibility of Granger non-causality and suggests at least one way Granger causality. Real output, exports and imports are found to be cointegrated in two of the countries and the resulting error-correction models suggest that Granger causality runs from exports and imports to real output in these cases. Exogeneity tests are conducted for exports with respect to real output. However, while the assumption of weak exogeneity is validated in two of the countries, the null hypothesis of super exogeneity is rejected. The test results therefore cast doubts on policy recommendations for the LDCs based on the export-led growth hypothesis.     

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.     

Export Growth and Domestic Performance

A VAR approach is used to analyze the effects of export growth on the evolution of GDP, domestic employment, and investment in 39 economies. The results strongly support the export-led growth hypothesis. Export growth affects GDP growth positively in 30 countries. In six countries, all of them inward-looking, the effects are negative. For these countries, and for these countries alone, export growth has a negative effect on the evolution of both domestic employment and investment. This also suggests the importance of the indirect effects of exports on GDP growth.     

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.     

Export Sector Dynamics and Domestic Growth: The Case of Colombia

Analyses of Colombian data have generally failed to confirm the hypothesis of export-led growth. This paper generates several measures of export diversification and structural change in exports, and argues that these measures are useful in assessing growth externalities generated by the export sector. In a simultaneous-equations framework, increases in the rate of export structural change are associated with accelerated Colombian GDP growth. Export diversification, by contrast, is not a source of economic growth, and the reduced-form relationship between aggregate lagged export growth and GDP growth is weak.     

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.     

The energy-GDP nexus: Evidence from a panel of Pacific Island countries

The Pacific Island countries are small island economies that are increasingly dependent on energy for growth and development, yet highly susceptible to climate change. Thus, the relationship between energy consumption and GDP is crucial for realizing their future development and growth objectives. This article tests for Granger causality and provides long-run structural estimates for the relationship between energy consumption, GDP and urbanization for a panel of Pacific Island countries. For the panel as a whole in the long-run there is bidirectional Granger causality between energy consumption and GDP and these variables exert a positive impact on each other. A 1% increase in energy consumption increases GDP by 0.11%, while a 1% increase in GDP increases energy consumption by 0.23%. The findings suggest that for the panel as a whole these countries should increase investment in energy infrastructure and regulatory reform of energy infrastructure to improve delivery efficiency, continue to promote alternative energy sources and put in place energy conservation policies to reduce unnecessary wastage. These strategies seek to realize the dual objectives of reducing the adverse effects of energy use on the environment, while avoiding the negative effect on economic growth of reducing energy consumption.     

浙江省能源消费与经济增长的动态关系

利用1985—2009年浙江省能源消费总量和国内生产总值的时间序列数据,采用单位根检验、协整检验、格兰杰因果关系检验,并利用脉冲响应函数、方差分解分析方法,对浙江省能源消费与经济增长之间的因果关系、动态关系以及定量关系进行了研究。研究结果表明:浙江省能源消费与经济增长之间存在从经济增长到能源消费的单向因果关系;经济增长的较小波动会对能源消费产生持续的影响。     

中国对外贸易对经济增长作用的实证分析

采用协整检验和格兰杰因果检验的方法,分析了中国对外贸易与经济增长之间的关系。研究表明,对外贸易与经济增长存在长期的稳定关系,且进口的产出弹性相对较大,出口与经济增长之间存在单项的因果关系。因此,中国经济增长还是处于出口导向型的经济增长,同时在加大出口的同时,要重视进口的作用。     

黑龙江省碳排放与经济增长——基于协整分析和格兰杰因果检验

采用协整分析、格兰杰(Granger)因果关系检验,利用黑龙江省1990～2009年GDP和碳排放总量的时间序列数据,对黑龙江省碳排放与经济增长的关系进行了实证分析,得出黑龙江省碳排放与经济增长存在长期均衡关系,且碳排放是经济增长的格兰杰原因。     

Export–led growth and structural change: evidence from Malaysia

Many studies have tried to establish the causal link between export expansion and economic growth. This contribution is to recognize that structural changes will change the sources of growth and this will affect the export-growth relationship. A country case study approach is used focusing on Malaysia, a country with one of the world's highest sustained growth rates and a long history of commodity trade. We use VAR analysis of Malaysian quarterly trade and GDP growth from 1965 to 1996. Trade data are disaggregated into primary and manufactures exports and causality tests are applied to the entire period as well as two subperiods #150 the 1965 #1501980 period when policy emphasis was on import substitution and the 1981#1501996 period when policies favoured export-led growth. Statistical tests confirm export-led growth for the full period and for the period to 1980 but tests on the 1981#1501996 period show growth causing exports. Primary exports had a stronger direct impact on economic growth than manufactures. The weakening support for export-led growth after Malaysia shifted to an export-oriented development strategy is associated with structural changes associated with industrialization. Interaction among trade and growth variables becomes more complex with a broadening export base and more diverse sources of growth.     

Thresholds in finance–growth nexus: Evidence from G‐7 economies

This study explores the finance and economic growth nexus in G‐7 economies as these countries experience significantly higher levels of financial development. Using a balanced panel of 31 years from 1983 to 2013, we provide new evidence on the finance–growth relationship. We show the presence of nonlinearity as there is an inverted U‐shaped relationship between finance and growth in the long run. Estimating the thresholds in the finance–growth nexus, we notice that there exists a threshold effect of finance at 109% of Gross Domestic Product (GDP). We observe that exceeding the threshold would hinder the countries instead of furthering economic growth as too much finance is harmful. Based on the panel Granger causality test results, we claim that financial development should be associated with optimal growth performance. Our findings for the G‐7 economies offer some useful policy inferences to the emerging and developing economies in designing their financial development strategies.     

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.     

A Band Spectral Analysis of Exports and Economic Growth in the United States

This paper examines the role of exports in aggregate economic growth in the United States using band spectral regression. The findings reveal a predictable relationship between long-run frequency components of real export growth and real GDP growth over the post-Bretton Woods period of flexible exchange rates. The study fails to uncover a significant relationship between long-run frequency components of the terms of trade and real output. Overall, the findings support the export-led growth hypothesis, and dismiss long-run movements in the terms of trade as an important determinant of real output growth.     

Openness in the Canadian economy: 1870–1988

The causal relation between openness and GDP and between exports and imports are examined. Causality test carried out in growth rates showed that over the period 1870–1988 openness, both narrowly and broadly defined, Granger-causes GDP growth; tests for the inverse causality produced mixed results, validating causality from GDP growth to export plus import growth, but rejecting causlaity from GDP growth to export growth; it was also found that export growth causes import growth, but not the opposite. Causality tests over four subperiods indicated the importance of openness for only the earliest phase of Canadian economic development. While the absence of causality in the later subperiods is largely compatible with the experience of the industrial countries, no meaningful comparison can be made between the experience of Canada and that of developing countries owing to causality variations of openness and to large differences in resource endowments.