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Trade-led growth hypothesis: An empirical analysis of South Asian countries

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  • Hye, Qazi Muhammad Adnan
  • Wizarat, Shahida
  • Lau, Wee-Yeap

Abstract

In this paper we examine trade-growth nexus using data from six Asian countries. We apply the ADF unit root test to check for stationarity; and the autoregressive distributed lag (ARDL) approach for a long-run relationship among exports, imports and economic growth. For the direction of causality, we implement the modified Granger Causality test. We find that the export-led growth model is relevant to all countries except Pakistan, while the import-led growth model is relevant to all countries. The growth-led export model applies to all countries except Bangladesh and Nepal. The growth-led import model and export–import model are relevant for all countries in the sample. The results show that domestic and overseas demand contribute to economic growth and employment generation. Growth accruals through import-led model augur well for the countries studied. Our findings point to the potential for growth through tapping domestic demand in the event of global recession. It also appears that opportunities of joint catering for domestic demand through south–south trade expansion are possible.

Suggested Citation

  • Hye, Qazi Muhammad Adnan & Wizarat, Shahida & Lau, Wee-Yeap, 2013. "Trade-led growth hypothesis: An empirical analysis of South Asian countries," Economic Modelling, Elsevier, vol. 35(C), pages 654-660.
  • Handle: RePEc:eee:ecmode:v:35:y:2013:i:c:p:654-660
    DOI: 10.1016/j.econmod.2013.07.040
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    References listed on IDEAS

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    Cited by:

    1. Ioanna Konstantakopoulou, 2016. "New evidence on the Export-led-growth hypothesis in the Southern Euro-zone countries (1960-2014)," Economics Bulletin, AccessEcon, vol. 36(1), pages 429-439.
    2. Tang, Chor Foon & Lai, Yew Wah & Ozturk, Ilhan, 2015. "How stable is the export-led growth hypothesis? Evidence from Asia's Four Little Dragons," Economic Modelling, Elsevier, vol. 44(C), pages 229-235.
    3. Rahman, Mohammad Mafizur & Mamun, Shamsul Arifeen Khan, 2016. "Energy use, international trade and economic growth nexus in Australia: New evidence from an extended growth model," Renewable and Sustainable Energy Reviews, Elsevier, vol. 64(C), pages 806-816.
    4. Yaya KEHO, 2017. "The Exports and Economic Growth Nexus in Cote D ivoire: Evidence from a Multivariate Time Series Analysis," Asian Journal of Economic Modelling, Asian Economic and Social Society, vol. 5(2), pages 135-146, June.
    5. Jayanti Bhattacharjee & Sushil Kr. Haldar, 2015. "Economic Growth of Selected South Asian Countries: Does Institution Matter?," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 5(2), pages 356-370, February.

    More about this item

    Keywords

    Exports; Imports; Economic growth;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production

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