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A further examination of the export-led growth hypothesis

  • Dierk Herzer

    ()

    (Johann Wolfgang Goethe-University, Frankfurt am Main / Germany)

This paper challenges the common view that exports generally contribute more to GDP growth than a mere change in export volume, as the export-led growth hypothesis predicts. Applying heterogeneous panel cointegration techniques to a production function model 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 in developing countries, (ii) the long-run effect of exports on non-export output, however, is negative on average, and (iii) there are large differences in the long-run effect of exports on non-export GDP across countries. Evidence from a simple regression analysis suggests 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, business regulation, and labour regulation, whereas there is no statistically significant association between the growth effect of exports and the capacity of a country to absorb knowledge.

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File URL: http://www2.vwl.wiso.uni-goettingen.de/ibero/working_paper_neu/DB200.pdf
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Paper provided by Ibero-America Institute for Economic Research in its series Ibero America Institute for Econ. Research (IAI) Discussion Papers with number 200.

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Length: 34 pages
Date of creation: 16 Feb 2010
Date of revision:
Handle: RePEc:got:iaidps:200
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