Some evidence on the export-led growth hypothesis for Ireland

Abstract

The paper tests the export-led growth hypothesis in Ireland over the last 40 years using the modern econometric analysis of nonstationary time series. It is found that over the 1950–1990 period there is no long-run relationship between real GDP and export volume and no evidence for the export-led growth hypothesis either. The analysis of the more recent 1981–1994 period provides strong evidence in favour of a long-run relationship between industrial production and export volume and Granger-causality from exports to output. These results support the export-led growth hypothesis over the last fifteen years and highlight the importance of export-promoting policies.