Causal Nexus between Export and Growth: BRICS Nations

Abstract

The present paper investigates the causal nexus between exports and economic growth for the sample of BRICS nations, namely, Brazil, Russia, India, China and South Africa, using Johansen co-integration and VECM Granger Causality test. The Co-integration test result confirms a significant relationship between exports and GDP in the long-term. The Causality analysis exhibits a long-run bidirectional causal link between GDP and exports for the BRICS nations except Brazil. One-way long-run causal link runs from GDP to exports is observed for Brazil. Besides, the empirical results neither support ELG nor GLE hypothesis in the short-run for Brazil and Russia. Feedback effects between exports and GDP for India and unidirectional causality from GDP to exports in the case of China were found in the short-run.

Keywords: Export-led Growth Strategy, Co-integration, Causality, BRICS Nations

JEL Classification: F10, F14, F43