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On the export-led growth hypothesis for the little dragons: An empirical reinvestigation

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  • Jordan Shan
  • Fiona Sun

Abstract

The export-led growth hypothesis is tested using quarterly time series data for Hong Kong, Korea, and Taiwan and by constructing a vector autoregression (VAR) model. The Granger no-causality procedure developed by Toda and Yamamoto [1995] was applied to test the causal link between real export growth and real industrial output growth. Three distinct features in this paper stand out against earlier studies on the Little Dragon countries of Asia. First, going beyond the traditional two-variable relationship, a VAR model is built in the production function context to avoid a possible specification bias. Second, Riezman et al. [1996] are followed to test the export-led growth hypothesis while controlling for the growth of imports to avoid producing a spurious causality result. Third, the sensitivity of causality test results under different lag structures is tested along with the choice of optimal lags. In particular, the methodology developed by Toda and Yamamoto is expected to improve the standard F-statistics in the causality test process. The principal result from this research cannot offer support for the export-led growth hypothesis. Copyright International Atlantic Economic Society 1998

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  • Jordan Shan & Fiona Sun, 1998. "On the export-led growth hypothesis for the little dragons: An empirical reinvestigation," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 26(4), pages 353-371, December.
    • Handle: RePEc:kap:atlecj:v:26:y:1998:i:4:p:353-371
    DOI: 10.1007/BF02299449
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    Cited by:

    1. Henryk Gurgul & Łukasz Lach, 2010. "International trade and economic growth in the Polish economy," Operations Research and Decisions, Wroclaw University of Science and Technology, Faculty of Management, vol. 20(3-4), pages 5-29.
    2. Mehmet Balcilar & Zeynel Ozdemir, 2013. "The export-output growth nexus in Japan: a bootstrap rolling window approach," Empirical Economics, Springer, vol. 44(2), pages 639-660, April.
    3. Tang, Chor Foon & Lai, Yew Wah, 2011. "The Stability of Export-led Growth Hypothesis: Evidence from Asia's Four Little Dragons," MPRA Paper 27962, University Library of Munich, Germany.
    4. Jr-Tsung Huang, 2007. "Labor force participation and juvenile delinquency in Taiwan: a time series analysis," Journal of Family and Economic Issues, Springer, vol. 28(1), pages 137-150, March.
    5. Bosupeng, Mpho, 2015. "Exports Multiplicity and The Dutch Disease," MPRA Paper 77919, University Library of Munich, Germany, revised 2015.
    6. Harrison, Ann & Rodríguez-Clare, Andrés, 2010. "Trade, Foreign Investment, and Industrial Policy for Developing Countries," Handbook of Development Economics, in: Dani Rodrik & Mark Rosenzweig (ed.), Handbook of Development Economics, edition 1, volume 5, chapter 0, pages 4039-4214, Elsevier.
    7. Hatemi-J, Abdulnasser, 2002. "Export performance and economic growth nexus in Japan: a bootstrap approach," Japan and the World Economy, Elsevier, vol. 14(1), pages 25-33, January.
    8. 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.

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