Export-led growth hypothesis: cointegration and causality analysis for Taiwan

Abstract

The hypothesis of export-led growth (ELG) hypothesis is tested for Taiwan using Engle and Granger's (1987) cointegration and error correction model approaches. This study shows that total exports and GDP, as well as exports of manufactured goods and GDP are cointegrated during the post-reform period, 1960–90. This study also finds evidence of bidirectional causality, and thus concludes that, in the case of Taiwan, exports and growth mutually reinforce each other.