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The Validity of the ELG Hypothesis in the MENA Region: Cointegration and Error Correction Model Analysis

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  • Abu-Qarn, Aamer
  • Abu-Bader, Suleiman

Abstract

The paper examines the export-led growth (ELG) hypothesis for nine Middle East and North Africa (MENA) countries in three-variable vector autoregressive and error correction models. When considering total exports, our results reject the ELG hypothesis in almost all of these countries. When we examine only manufactured exports, we find no support for ELG in countries with relatively low shares of manufactured exports in total merchandise exports but strong support in countries with relatively high shares. These findings suggest that promoting exports may contribute to economic growth only after a certain threshold of manufactured exports has been reached.

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File URL: http://mpra.ub.uni-muenchen.de/1116/
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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 1116.

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Date of creation: 2001
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Publication status: Published in Applied Economics 15.36(2004): pp. 1685-1695
Handle: RePEc:pra:mprapa:1116

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Keywords: ELG; MENA; Middle East and North Africa; economic growth; export promotion; Granger causality; cointegration; error correction model;

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  1. Kravis, Irving B, 1970. "Trade as a Handmaiden of Growth: Similarities between the Nineteenth and Twentieth Centuries," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 80(323), pages 850-72, December.
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  3. Judith A. Giles & Cara L. Williams, 2000. "Export-Led Growth: A Survey of the Empirical Literature and Some Noncausality Results, Part 1," Econometrics Working Papers, Department of Economics, University of Victoria 0001, Department of Economics, University of Victoria.
  4. Feder, Gershon, 1983. "On exports and economic growth," Journal of Development Economics, Elsevier, Elsevier, vol. 12(1-2), pages 59-73.
  5. 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, University of Iowa, Department of Economics 92-27, University of Iowa, Department of Economics.
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  9. Judith A. Giles & Cara L. Williams, 2000. "Export-Led Growth: A Survey of the Empirical Literature and Some Noncausality Results, Part 2," Econometrics Working Papers, Department of Economics, University of Victoria 0002, Department of Economics, University of Victoria.
  10. John Y. Campbell & Pierre Perron, 1991. "Pitfalls and Opportunities: What Macroeconomists Should Know About Unit Roots," NBER Chapters, National Bureau of Economic Research, Inc, in: NBER Macroeconomics Annual 1991, Volume 6, pages 141-220 National Bureau of Economic Research, Inc.
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  14. Bagala Biswal & Urvashi Dhawan, 1998. "Export-led growth hypothesis: cointegration and causality analysis for Taiwan," Applied Economics Letters, Taylor & Francis Journals, Taylor & Francis Journals, vol. 5(11), pages 699-701.
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  17. Hiro Y. Toda & Peter C.B. Phillips, 1991. "Vector Autoregression and Causality," Cowles Foundation Discussion Papers, Cowles Foundation for Research in Economics, Yale University 977, Cowles Foundation for Research in Economics, Yale University.
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Cited by:
  1. Alimi, Santos R. & Muse, Bernard O., 2012. "Export - led growth or growth – driven exports? Evidence from Nigeria," MPRA Paper 53468, University Library of Munich, Germany.
  2. Boriss Siliverstovs & Dierk Herzer, 2005. "Manufacturing exports, mining exports and growth: cointegration and causality analysis for Chile (1960-2001)," Ibero America Institute for Econ. Research (IAI) Discussion Papers, Ibero-America Institute for Economic Research 104, Ibero-America Institute for Economic Research.
  3. Christian Dreger & Dierk Herzer, 2011. "A Further Examination of the Export-Led Growth Hypothesis," Discussion Papers of DIW Berlin 1149, DIW Berlin, German Institute for Economic Research.
  4. Harb, Nasri, 2008. "Oil Exports, Non Oil GDP and Investment in the GCC Countries," MPRA Paper 15576, University Library of Munich, Germany.
  5. Nowak-Lehmann D., Felicitas & Herzer, Dierk & Siliverstovs, Boriss, 2005. "Export-Led Growth in Chile: Assessing the Role of Export Composition in Productivity Growth," Proceedings of the German Development Economics Conference, Kiel 2005 20, Verein für Socialpolitik, Research Committee Development Economics.
  6. Sheila Amin Gutierrez de Pineres, 2006. "What a difference a source makes! An analysis of export data," Applied Economics Letters, Taylor & Francis Journals, Taylor & Francis Journals, vol. 13(1), pages 35-39.
  7. Dizaji, S.F., 2012. "Exports, government size and economic growth (Evidence from Iran as a developing oil-export based economy)," ISS Working Papers - General Series, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague 535, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
  8. Abu-Bader, Suleiman & Abu-Qarn, Aamer, 2005. "Financial Development and Economic Growth: Time Series Evidence from Egypt," MPRA Paper 1113, University Library of Munich, Germany.
  9. Saten Kumar, 2011. "Estimating export demand equations in selected Asian countriess," Journal of Chinese Economic and Foreign Trade Studies, Emerald Group Publishing, Emerald Group Publishing, vol. 4(1), pages 5-16, February.
  10. Araujo, Ricardo Azevedo & Soares, Cristiane, 2011. "‘Export Led Growth’ x ‘Growth Led Exports’: What Matters for the Brazilian Growth Experience after Trade Liberalization?," MPRA Paper 30562, University Library of Munich, Germany.
  11. Sadorsky, Perry, 2011. "Trade and energy consumption in the Middle East," Energy Economics, Elsevier, Elsevier, vol. 33(5), pages 739-749, September.
  12. Husein, J, 2010. "Export-Led Growth Hypothesis In The Mena Region: A Multivariate Cointegration, Causality And Stability Analysis," Applied Econometrics and International Development, Euro-American Association of Economic Development, Euro-American Association of Economic Development, vol. 10(2).
  13. Neveen M. TORAYEH, 2011. "Manufactured Exports And Economic Growth In Egypt: Cointegration And Causality Analysis," Applied Econometrics and International Development, Euro-American Association of Economic Development, Euro-American Association of Economic Development, vol. 11(1).
  14. Helmi Hamdi & Rashid Sbia & Hakimi Abdelaziz & Wafa Khlaifia hakimi, 2013. "Multivariate Granger causality between foreign direct investment and economic growth in Tunisia," Economics Bulletin, AccessEcon, vol. 33(2), pages 1193-1203.

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