Exports, Growth and Causality: An Application of Co-Integration and Error-Correction Modelling

The Pakistan Development Review, Vol. 4, No. 34, pp. 1001-1012, 1995

20 Pages Posted: 1 Jul 2008

See all articles by Ashfaque

Ashfaque

affiliation not provided to SSRN

Afia Malik

Pakistan Institute of Development Economics

Lubna Hasan

Pakistan Institute of Development Economics (PIDE)

Date Written: December 23, 1995

Abstract

The relationship between export expansion and economic growth has been examined extensively during the last two decades in the context of the suitability of the alternative development strategies. The decade of the 1970s witnessed an emerging consensus in favour of export promotion as development strategy. Such a consensus was based on the following facts. First, higher export earnings working through alleviating foreign exchange constraints may enhance the ability of a developing country to import more industrial raw materials and capital goods, which, in turn, may expand its productive capacity. Secondly, the competition in export markets abroad may lead to the exploitation of economies of scale, greater capacity utilisation, efficient resource allocation, and an acceleration of technical progress in production. Thirdly, given the theoretical arguments mentioned above, the observed strong correlation between exports and economic growth was interpreted as empirical evidence in favour of export promotion as a development strategy.

Keywords: Exports, Growth

JEL Classification: F15, F41

Suggested Citation

Khan, Ashfaque Hasan and Malik, Afia and Hasan, Lubna, Exports, Growth and Causality: An Application of Co-Integration and Error-Correction Modelling (December 23, 1995). The Pakistan Development Review, Vol. 4, No. 34, pp. 1001-1012, 1995, Available at SSRN: https://ssrn.com/abstract=1152697

Ashfaque Hasan Khan

affiliation not provided to SSRN

Afia Malik

Pakistan Institute of Development Economics ( email )

Quaid-i-Azam University Campus
P.O.Box 1091
Islamabad, Federal Capital 44000
Pakistan

Lubna Hasan (Contact Author)

Pakistan Institute of Development Economics (PIDE) ( email )

Quaid-i-Azam University Campus
P.O.Box 1091
Islamabad, Federal Capital 44000
Pakistan