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Exports, imports and economic growth in South Korea and Japan: a tale of two economies

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  • Wenyu Zang
  • Mark Baimbridge

Abstract

This article investigates the relationship between exports, imports and economic growth for South Korea and Japan by constructing a Vector Autoregression (VAR) model. Causality is examined between real Gross Domestic Product (GDP), real exports and real imports. Several principal results emerge from the empirical work. First, the three variables are cointegrated for both countries, implying that a long run steady state exists. Second, there is evidence of bidirectional causality between imports and economic growth for both countries. Finally, Japan seems to experience export-led growth, while GDP growth in South Korea has a negative effect on export growth. These contrasting findings could result from export goods in Japan exhibiting greater nonprice competitive aspects, although their success fails to trigger a virtuous circle since growth fails to lead to increased exports, while for South Korea, output growth leads to a decrease in export growth suggesting a strong domestic market.

Suggested Citation

  • Wenyu Zang & Mark Baimbridge, 2012. "Exports, imports and economic growth in South Korea and Japan: a tale of two economies," Applied Economics, Taylor & Francis Journals, vol. 44(3), pages 361-372, January.
  • Handle: RePEc:taf:applec:44:y:2012:i:3:p:361-372
    DOI: 10.1080/00036846.2010.508722
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    File URL: http://hdl.handle.net/10.1080/00036846.2010.508722
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    References listed on IDEAS

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    1. Hirotaka Takeuchi & Tsutomu Shibata, 2006. "Japan, Moving Toward a More Advanced Knowledge Economy : Volume 2. Advanced Knowledge-Creating Companies," World Bank Publications, The World Bank, number 7082, September.
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    1. repec:eee:foreco:v:26:y:2017:i:c:p:30-45 is not listed on IDEAS
    2. Jacint Balaguer & Tatiana Florica & Jordi Ripollés, 2015. "Foreign trade and economic growth in Spain (1900–2012): the role of energy imports," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 32(3), pages 359-375, December.
    3. repec:ibn:ijefaa:v:9:y:2017:i:9:p:1-7 is not listed on IDEAS

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