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Export-Led Growth, Growth-Driven Export, Both or None? Granger Causality Analysis on OECD Countries

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  • Konya, L.

Abstract

This paper investigates the possibility of export-led growth and growth-driven export by testing for Granger causality between the logarithms of real exports and real GDP in twenty-five OECD countries. Two complementary testing strategies are applied. First, depending on the time series properties of the data, causality is tested with Wald tests within finite-order vector autoregressive (VAR) models in levels and/or in first-differences. Then, with no need for pre-testing, a modified Wald procedure is used in augmented level VAR systems. In both cases we experiment with alternative deterministic trend degrees. The results indicate that there is no causality between exports and growth (NC) in Luxembourg and in the Netherlands, exports cause growth (ECG) in Iceland, growth causes exports (GCE) in Canada, Japan and Korea, and there is two-way causality between exports and growth (TWC) in Sweden and in the UK. Although with less certainty, we also conclude that there is NC in Denmark, France, Greece, Hungary and Norway, ECG in Australia, Austria and Ireland, and GCE in Finland, Portugal and the USA. However, in the case of Belgium, Italy, Mexico, New Zealand, Spain and Switzerland the results are too controversial to make a simple choice.

Suggested Citation

  • Konya, L., 2004. "Export-Led Growth, Growth-Driven Export, Both or None? Granger Causality Analysis on OECD Countries," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 4(1).
    • Handle: RePEc:eaa:aeinde:v:4:y:2004:i:1_5
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    5. Akbay O. S., 2011. "Trade-Growth Nexus: Turkish Case," EuroEconomica, Danubius University of Galati, issue 28, pages 108-114, May.
    6. Guisan, M.C., 2006. "Industry, Foreign Trade and Development: Econometric Models of Europe and North America, 1965-2003," International Journal of Applied Econometrics and Quantitative Studies, Euro-American Association of Economic Development, vol. 3(1), pages 5-30.
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    More about this item

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • F49 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Other
    • O51 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • O56 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Oceania

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