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An Empirical Note on the Export-Led Growth Hypothesis: The Case of Malaysia

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  • Ibrahim, Mansor H.

    (Department of Economics, International Islamic University Malaysia)

Abstract

The present empirical note re-examines the export-led growth hypothesis for the case of Malaysia. Using standard procedures of unit root testing, cointegration and error correction modelling, we find evidence for bi-directional causality between exports and real output per capita. Addressing the issue of exogeneity, we test for weak exogeneity and super exogeneity of exports within the error correction framework. We find evidence that exports are not weakly exogenous and subsequently, are not super exogenous. This result weakens the case for the export-led growth hypothesis. In the Malaysian context, the Lucas critique applies, namely, that the relationship between exports and real output per capita is not invariant to policy changes or regime shifts.

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Article provided by Queensland University of Technology (QUT), School of Economics and Finance in its journal Economic Analysis and Policy (EAP).

Volume (Year): 32 (2002)
Issue (Month): 2 (June Special Issue)
Pages: 221-232

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Handle: RePEc:eap:articl:v:32:y:2002:i:2:p:221-232

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  1. Levine, Ross & Renelt, David, 1992. "A Sensitivity Analysis of Cross-Country Growth Regressions," American Economic Review, American Economic Association, vol. 82(4), pages 942-63, September.
  2. A. F. Darrat & M. K. Hsu & M. Zhong, 2000. "Testing export exogeneity in Taiwan: further evidence," Applied Economics Letters, Taylor & Francis Journals, vol. 7(9), pages 563-567.
  3. Johansen, Soren, 1992. "Testing weak exogeneity and the order of cointegration in UK money demand data," Journal of Policy Modeling, Elsevier, vol. 14(3), pages 313-334, June.
  4. Khan, Mohsin S & Knight, Malcolm D, 1988. "Import Compression and Export Performance in Developing Countries," The Review of Economics and Statistics, MIT Press, vol. 70(2), pages 315-21, May.
  5. Mankiw, N Gregory & Romer, David & Weil, David N, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 407-37, May.
  6. Riezman, R.G. & Summers, P.M. & Whiteman, C.H., 1991. "The Engine of Growth or Its Handmaiden? A Time Series Assessment of Export-Led Growth," Working Papers 92-27, University of Iowa, Department of Economics.
  7. Jordan Shan & Fiona Sun, 1998. "On the export-led growth hypothesis for the little dragons: An empirical reinvestigation," Atlantic Economic Journal, International Atlantic Economic Society, vol. 26(4), pages 353-371, December.
  8. Asafu-Adjaye, John & Chakraborty, Debasish, 1999. "Export-Led Growth and Import Compression: Further Time Series Evidence from LDCs," Australian Economic Papers, Wiley Blackwell, vol. 38(2), pages 164-75, June.
  9. Yousif. Al-Yousif, 1999. "On the Role Exports in the Economic Growth of Malaysia: A Multivariate Analysis," International Economic Journal, Taylor & Francis Journals, vol. 13(3), pages 67-75.
  10. W. Robert & J. Alexander, 1997. "Inflation and economic growth: evidence from a growth equation," Applied Economics, Taylor & Francis Journals, vol. 29(2), pages 233-238.
  11. Subrata Ghatak & Chris Milner & Utku Utkulu, 1997. "Exports, export composition and growth : cointegration and causality evidence for Malaysia," Applied Economics, Taylor & Francis Journals, vol. 29(2), pages 213-223.
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