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A further examination of the export-led growth hypothesis

  • Christian Dreger
  • Dierk Herzer

    ()

This article challenges the common view that exports generally contribute more to GDP growth than a pure change in export volume, as the export-led growth hypothesis predicts. Applying panel cointegration techniques to a production function with non-export GDP as the dependent variable, we find for a sample of 45 developing countries that: (i) exports have a positive short-run effect on non-export GDP and vice versa (short-run bidirectional causality), (ii) the long-run effect of exports on non-export output, however, is negative on average, but (iii) there are large differences in the long-run effect of exports on non-export GDP across countries. Cross-sectional regressions indicate that these cross-country differences in the long-run effect of exports on non-export GDP are significantly negatively related to cross-country differences in primary export dependence and business and labor market regulation. In contrast, there is no significant association between the growth effect of exports and the capacity of a country to absorb new knowledge. Copyright Springer-Verlag 2013

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File URL: http://hdl.handle.net/10.1007/s00181-012-0602-4
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Article provided by Springer in its journal Empirical Economics.

Volume (Year): 45 (2013)
Issue (Month): 1 (August)
Pages: 39-60

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Handle: RePEc:spr:empeco:v:45:y:2013:i:1:p:39-60
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