Export-Led Growth: A Survey of the Empirical Literature and Some Noncausality Results

Abstract

The economic development and growth literature contains extensive discussions on relationships between exports and economic growth. One debate centers on whether countries should promote the export sector to obtain economic growth. An abundant empirical literature on this export-led growth (ELG) hypothesis has followed. We contribute to this literature in two ways. First, we provide a comprehensive survey of more than one hundred and fifty export-growth applied papers. We describe the changes that have occurred, over the last two decades, in the methodologies used to empirically examine for relationships between exports and economic growth, and we provide information on the current findings. The last decade has seen an abundance of time series studies which focus on examining for causality via exclusions restrictions tests, impulse response function analysis and forecast error variance decompositions. Our second contribution is to examine some of these time series methods. We show that ELG results based on standard causality techniques are not typically robust to specification or method. We do this by reconsidering two export-led growth applications--Oxley's 1993 study for Portugal and Henriques and Sadorsky's 1996 analysis for Canada. Our results suggest that extreme care should be exercised when interpreting much of the applied research on the ELG hypothesis.

JEL Classification: F43, O11, 051, 052