Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/57312
Authors: 
Herzer, Dierk
Year of Publication: 
2010
Series/Report no.: 
Discussion papers, Ibero America Institute for Economic Research 200
Abstract: 
This paper challenges the common view that exports generally contribute more to GDP growth than a mere change in export volume, as the export-led growth hypothesis predicts. Applying heterogeneous panel cointegration techniques to a production function model 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 in developing countries, (ii) the long-run effect of exports on non-export output, however, is negative on average, and (iii) there are large differences in the long-run effect of exports on non-export GDP across countries. Evidence from a simple regression analysis suggests 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, business regulation, and labour regulation, whereas there is no statistically significant association between the growth effect of exports and the capacity of a country to absorb knowledge.
Subjects: 
Export-led growth
Developing countries
Panel cointegration
JEL: 
F43
O11
C23
Document Type: 
Working Paper

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