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A further examination of the export-led growth hypothesis

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  • Dierk Herzer

    ()
    (Johann Wolfgang Goethe-University, Frankfurt am Main / Germany)

Abstract

This paper challenges the common view that exports generally contribute more to GDP growth than a mere change in export volume, as the export-led growth hypothesis predicts. Applying heterogeneous panel cointegration techniques to a production function model 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 in developing countries, (ii) the long-run effect of exports on non-export output, however, is negative on average, and (iii) there are large differences in the long-run effect of exports on non-export GDP across countries. Evidence from a simple regression analysis suggests 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, business regulation, and labour regulation, whereas there is no statistically significant association between the growth effect of exports and the capacity of a country to absorb knowledge.

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Bibliographic Info

Paper provided by Ibero-America Institute for Economic Research in its series Ibero America Institute for Econ. Research (IAI) Discussion Papers with number 200.

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Length: 34 pages
Date of creation: 16 Feb 2010
Date of revision:
Handle: RePEc:got:iaidps:200

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Keywords: Export-led growth; Developing countries; Panel cointegration;

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Citations

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Cited by:
  1. Christian Dreger & Dierk Herzer, 2012. "A further examination of the export-led growth hypothesis," FIW Working Paper series 084, FIW.
  2. Dreger, Christian & Zhang, Yanqun, 2013. "On the relevance of exports for regional output growth in China," Discussion Papers 331, European University Viadrina Frankfurt (Oder), Department of Business Administration and Economics.
  3. Aleksandra Parteka & Joanna Wolszczak-Derlacz, 2013. "The Impact of Trade Integration with the European Union on Productivity in a Posttransition Economy: The Case of Polish Manufacturing Sectors," Emerging Markets Finance and Trade, M.E. Sharpe, Inc., vol. 49(2), pages 84-104, March.
  4. Paula Gracinda Santos & Ana Paula Ribeiro & Vitor Manuel Carvalho, 2013. "Export-led growth in Europe: Where and what to export?," FEP Working Papers 479, Universidade do Porto, Faculdade de Economia do Porto.
  5. Mariam Camarero & Inmaculada Martínez-Zarzoso & Felicitas Nowak-Lehmenn D. & Cecilio Tamarit, 2013. "Trade Openness and Income: A Tale of Two Regions," Ibero America Institute for Econ. Research (IAI) Discussion Papers 226, Ibero-America Institute for Economic Research.

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