An empirical investigation of the export growth-economic growth relationship

Abstract

The export growth-economic growth cointegration structure is investigated for a large sample of low/middle/high income countries, including the newly industrialized ones. Previous Granger causality studies in this area are fundamentally flawed due to the absence of any form of pretesting for cointegration, hence we forward our study. Extensive stationarity tests are conducted including the KPSS procedure. In sequence we conduct cointegration tests based on the Phillips-Hansen fully modified OLS method and then run the Phillips-Ouliaris tests of non-stationarity on the residuals. For the majority of the countries in our sample, export growth and economic growth are cointegrated.