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On Non-Linearities Between Exports Of Manufactures And Economic Growth

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Author Info

  • César Calderón

    ()
    (University of Rochester)

  • Alberto Chong

    ()
    (Inter-American Development Bank and Georgetown University)

  • Luisa Zanforlin

    ()
    (International Monetary Fund)

Abstract

Building up human capital and other complementarities may be important in the link between exports of manufactures and economic growth. On the other hand, managerial strategies that push for export promotion may be important, too. Though both may yield non-linearities in the link between exports and growth, the associated patterns differ. In this paper we take an aseptic, empirical view in the link between these two variables and the possible non-linear links. Since direct testing for non-linearities in panel data may yield non-significant results although they may actually be present, we propose a very simple method that may serve as a first approximation to uncover such non-linearities. We also take into consideration endogeneity and reverse causality problems (Arellano and Bover, 1995), and definitional problems in our variable of interest. In fact, we use a panel of 96 countries for the period 1960-1995 and find evidence consistent with the presence of non-linearities. We apply formal sensitivity analysis and confirm the results.

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Bibliographic Info

Article provided by Universidad del CEMA in its journal Journal of Applied Economics.

Volume (Year): IV (2001)
Issue (Month): (November)
Pages: 279-311

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Handle: RePEc:cem:jaecon:v:4:y:2001:n:2:p:279-311

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Related research

Keywords: growth; exports; dynamic panel data; endogeneity;

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References

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  1. J. Bradford De Long & Lawrence H. Summers, . "Equipment Investment and Economic Growth," J. Bradford De Long's Working Papers _122, University of California at Berkeley, Economics Department.
  2. Levin, Andrew & Raut, Lakshmi K, 1997. "Complementarities between Exports and Human Capital in Economic Growth: Evidence from the Semi-industrialized Countries," Economic Development and Cultural Change, University of Chicago Press, vol. 46(1), pages 155-74, October.
  3. Xavier Sala-i-Martin, 1997. "I just ran four million regressions," Economics Working Papers 201, Department of Economics and Business, Universitat Pompeu Fabra.
  4. Xu, Zhenhui, 1998. "Export and Income Growth in Japan and Taiwan," Review of International Economics, Wiley Blackwell, vol. 6(2), pages 220-33, May.
  5. Sebastian Edwards, 1991. "Trade Orientation, Distortions and Growth in Developing Countries," NBER Working Papers 3716, National Bureau of Economic Research, Inc.
  6. Alberto Chong & Luisa Zanforlin, 2002. "Technology and Epidemics," IMF Staff Papers, Palgrave Macmillan, vol. 49(3), pages 6.
  7. Robert J. Barro & Jong-Wha Lee, 1993. "International Comparisons of Educational Attainment," NBER Working Papers 4349, National Bureau of Economic Research, Inc.
  8. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
  9. Dani Rodrik, 1993. "Trade and Industrial Policy Reform in Developing Countries: A Review of Recent Theory and Evidence," NBER Working Papers 4417, National Bureau of Economic Research, Inc.
  10. Robert E Lucas, 1999. "Making a Miracle," Levine's Working Paper Archive 2101, David K. Levine.
  11. Islam, Nazrul, 1995. "Growth Empirics: A Panel Data Approach," The Quarterly Journal of Economics, MIT Press, vol. 110(4), pages 1127-70, November.
  12. Levine, Ross & Renelt, David, 1991. "A sensitivity analysis of cross-country growth regressions," Policy Research Working Paper Series 609, The World Bank.
  13. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
  14. David H. Romer & Jeffrey A. Frankel, 1999. "Does Trade Cause Growth?," American Economic Review, American Economic Association, vol. 89(3), pages 379-399, June.
  15. Jeffrey A. Frankel & David Romer, 1996. "Trade and Growth: An Empirical Investigation," NBER Working Papers 5476, National Bureau of Economic Research, Inc.
  16. Richard Blundell & Steve Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers W95/17, Institute for Fiscal Studies.
  17. Harrison, Ann, 1996. "Openness and growth: A time-series, cross-country analysis for developing countries," Journal of Development Economics, Elsevier, vol. 48(2), pages 419-447, March.
  18. Azariadis, Costas & Drazen, Allan, 1990. "Threshold Externalities in Economic Development," The Quarterly Journal of Economics, MIT Press, vol. 105(2), pages 501-26, May.
  19. Xu, Zhenhui, 1996. "On the Causality between Export Growth and GDP Growth: An Empirical Reinvestigation," Review of International Economics, Wiley Blackwell, vol. 4(2), pages 172-84, June.
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Cited by:
  1. Alberto Chong & Alejandro Micco, 2002. "Internet y la capacidad de innovar en América Latina," Research Department Publications 4292, Inter-American Development Bank, Research Department.
  2. Alberto Chong & Alejandro Micco, 2002. "The Internet and the Ability to Innovate in Latin America," Research Department Publications 4291, Inter-American Development Bank, Research Department.

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