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Empirical Economics

, Volume 45, Issue 1, pp 39–60 | Cite as

A further examination of the export-led growth hypothesis

  • Christian Dreger
  • Dierk Herzer
Article

Abstract

This article challenges the common view that exports generally contribute more to GDP growth than a pure change in export volume, as the export-led growth hypothesis predicts. Applying panel cointegration techniques to a production function 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 and vice versa (short-run bidirectional causality), (ii) the long-run effect of exports on non-export output, however, is negative on average, but (iii) there are large differences in the long-run effect of exports on non-export GDP across countries. Cross-sectional regressions indicate 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 and business and labor market regulation. In contrast, there is no significant association between the growth effect of exports and the capacity of a country to absorb new knowledge.

Keywords

Export-led growth Developing countries Panel cointegration 

JEL Classification

F43 O11 C23 

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Copyright information

© Springer-Verlag 2012

Authors and Affiliations

  1. 1.German Institute for Economic Research (DIW Berlin)BerlinGermany
  2. 2.European University Frankfurt (Oder)BrandenburgGermany
  3. 3.Department of EconomicsHelmut-Schmidt-UniversityHamburgGermany

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