The Export-led Growth Hypothesis: Evidence from OECD countries.

Abstract

The export-led growth (ELG) hypothesis is examined for 33 OECD countries from 1985 to 2010 using a time series analysis for individual economy as well as a panel data approach. Panel unit root tests and panel cointegration techniques are employed in order to draw sharper conclusions compared to the findings from time series analysis. In this paper, it is investigated the causal relationship between exports and economic growth as well as the impact of other relevant macroeconomic variables such as GDP net of exports, imports, gross fixed capital formation, interest rate, exchange rate, unemployment rate and rate of employment on the export growth. As these variables are closely related, instead of studying the direction of causation between exports and economic growth separately at a time, it is worthwhile to examine multivariate causalities among them. For this reason, Granger causality tests based on VECM are conducted for cointegrated variables.