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Estimating Export Equations for Developing Countries

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  • Sanjesh Kumar

Abstract

: The paper uses annual time series data to estimate the price and income elasticities of export demand for three developing countries Fiji, Papua New Guinea (PNG) and Bangladesh. The LSE-Hendry s general-to-specific approach (known as GETS) is employed by using correct specifications of relative price to find the relevant export elasticities. Income elasticities of export demand are found to be unity for all the three countries. The price elasticity estimates, in contrast, have correct signs, and give plausible magnitudes. Based on the results, exports in developing countries can be seen as an engine for growth, and thus, export promotion policies are necessary to improve trade balance and to achieve greater export-based growth.

Suggested Citation

  • Sanjesh Kumar, 2009. "Estimating Export Equations for Developing Countries," The IUP Journal of Applied Economics, IUP Publications, vol. 0(2), pages 17-28, March.
    • Handle: RePEc:icf:icfjae:v:08:y:2009:i:2:p:17-28
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    References listed on IDEAS

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    1. B. Bhaskara Rao & Rup Singh, 2007. "Estimating export equations," Applied Economics Letters, Taylor & Francis Journals, vol. 14(11), pages 799-802.
    2. Carmen M. Reinhart, 1995. "Devaluation, Relative Prices, and International Trade: Evidence from Developing Countries," IMF Staff Papers, Palgrave Macmillan, vol. 42(2), pages 290-312, June.
    3. Rose, Andrew K., 1991. "The role of exchange rates in a popular model of international trade : Does the 'Marshall-Lerner' condition hold?," Journal of International Economics, Elsevier, vol. 30(3-4), pages 301-316, May.
    4. Narayan, Paresh Kumar & Narayan, Seema, 2005. "Estimating income and price elasticities of imports for Fiji in a cointegration framework," Economic Modelling, Elsevier, vol. 22(3), pages 423-438, May.
    5. Rose, Andrew K., 1990. "Exchange rates and the trade balance : Some evidence from developing countries," Economics Letters, Elsevier, vol. 34(3), pages 271-275, November.
    6. Ostry, Jonathan D. & Rose, Andrew K., 1992. "An empirical evaluation of the macroeconomic effects of tarrifs," Journal of International Money and Finance, Elsevier, vol. 11(1), pages 63-79, February.
    7. Abdelhak Senhadji, 1998. "Time-Series Estimation of Structural Import Demand Equations: A Cross-Country Analysis," IMF Staff Papers, Palgrave Macmillan, vol. 45(2), pages 236-268, June.
    8. Abdelhak S. Senhadji & Claudio E. Montenegro, 1999. "Time Series Analysis of Export Demand Equations: A Cross-Country Analysis," IMF Staff Papers, Palgrave Macmillan, vol. 46(3), pages 1-2.
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    Cited by:

    1. Prakash, Kushneel & Maiti, Dibyendu, 2016. "Does devaluation improve trade balance in small island economies? The case of Fiji," Economic Modelling, Elsevier, vol. 55(C), pages 382-393.
    2. Ronal Chand & Rup Singh & Sumeet Lal & Nilesh Chand & Devendra Kumar Jain, 2022. "Determinants of Exports in a Small and Vulnerable Economy: Fiji Islands—A Disaggregated Analysis," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 34(6), pages 2948-2969, December.

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