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

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  • Husein, J

Abstract

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.

Suggested Citation

  • 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, vol. 10(2).
  • Handle: RePEc:eaa:aeinde:v:10:y:2010:i:2_13
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    File URL: http://www.usc.es/economet/reviews/aeid10213.pdf
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    References listed on IDEAS

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    1. Carsten Trenkler, 2008. "Determining p-values for systems cointegration tests with a prior adjustment for deterministic terms," Computational Statistics, Springer, vol. 23(1), pages 19-39, January.
    2. Riezman, Raymond G & Whiteman, Charles H & Summers, Peter M, 1996. "The Engine of Growth or Its Handmaiden? A Time-Series Assessment of Export-Led Growth," Empirical Economics, Springer, vol. 21(1), pages 77-110.
    3. 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.
    4. 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).
    5. 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.
    6. Granger, C. W. J., 1988. "Some recent development in a concept of causality," Journal of Econometrics, Elsevier, vol. 39(1-2), pages 199-211.
    7. Bruggeman, Annick & Donati, Paola & Warne, Anders, 2003. "Is the demand for euro area M3 stable?," Working Paper Series 255, European Central Bank.
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    More about this item

    Keywords

    Economic growth; Exports; Cointegration; Causality; Stability;

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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