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Export-Led Growth Hypothesis In The Mena Region: A Multivariate Cointegration, Causality And Stability Analysis

Empirical evidence supporting the export-led growth (ELG) hypothesis has been mixed and inconclusive. Some studies may have been misspecified since they tested the ELG hypothesis using bivariate models. Others used multivariate cointegration framework but presumed (either explicitly or implicitly) stability of the cointegrating relations. This study examines the ELG hypothesis for eight Middle East and North Africa (MENA) countries in a multivariate framework by including terms of trade as a third variable. We utilize Johansen and Juselius cointegration procedure and error correction modeling to test the ELG hypothesis. The empirical evidence supports the existence of a “stable” long-run equilibrium relationship among real output, real exports, terms of trade, and finds strong support for the ELG hypothesis in all but one of the MENA countries analyzed.

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Article provided by Euro-American Association of Economic Development in its journal Applied Econometrics and International Development.

Volume (Year): 10 (2010)
Issue (Month): 2 ()

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Handle: RePEc:eaa:aeinde:v:10:y:2010:i:2_13
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  1. Granger, C. W. J., 1988. "Some recent development in a concept of causality," Journal of Econometrics, Elsevier, vol. 39(1-2), pages 199-211.
  2. Riezman, R. & Whiteman, C. & Summers, P.M., 1995. "The Engine of Growth or Its Handmaiden? A Time Series Assessment of Export-Led Growth," Working Papers 95-16, University of Iowa, Department of Economics.
  3. Jamal HUSEIN, 2008. "Traditional Export Demand Relation: A Cointegration and Parameter Constancy Analysis," International Journal of Applied Econometrics and Quantitative Studies, Euro-American Association of Economic Development, vol. 5(2).
  4. Aamer Abu-Qarn & Suleiman Abu-Bader, 2004. "The validity of the ELG hypothesis in the MENA region: cointegration and error correction model analysis," Applied Economics, Taylor & Francis Journals, vol. 36(15), pages 1685-1695.
  5. Warne, Anders & Bruggeman, Annick & Donati, Paola, 2003. "Is the demand for euro area M3 stable?," Working Paper Series 0255, European Central Bank.
  6. Trenkler, Carsten, 2004. "Determining p-values for Systems Cointegration Tests With a Prior Adjustment for Deterministic Terms," Papers 2004,37, Humboldt-Universität Berlin, Center for Applied Statistics and Economics (CASE).
  7. Bassam Abual-Foul, 2004. "Testing the export-led growth hypothesis: evidence from Jordan," Applied Economics Letters, Taylor & Francis Journals, vol. 11(6), pages 393-396.
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