Export-Led Growth in the EU: Where and What to Export?

ABSTRACT

In the aftermath of the Great Recession, exports emerge as a meaningful source of growth. In this context, using a panel of 26 European Union members, we assess if and how the product and the destination structures of exports shape the growth dynamics for European countries. We find that growth is fostered through export specialization in high-value-added products, such as manufacturing and high-technology, and by export diversification across partners. However, enlarging the portfolio of partners, mainly to less developed and more distant countries, has negative impacts on growth. Unambiguously, relative concentration of exports should be directed towards higher growth countries.

KEYWORDS:

• Economic growth
• European Union
• exports’ destination
• panel data
• product structure of exports

Acknowledgments

We acknowledge Celsa Machado and the conference participants at EcoMod (International Conference on Economic Modeling), Prague, Czech Republic, 2013, and at ABSRC (Advances in Business-Related Scientific Research Conference), Venice, Italy, 2013.

Funding

This research has been financed by the European Regional Development Fund through COMPETE 2020 – Programa Operacional Competitividade e Internacionalização (POCI) and by Portuguese public funds through FCT (Fundação para a Ciência e a Tecnologia) in the framework of the project POCI-01-0145-FEDER-006890.

Notes

¹ For some recent studies that empirically support, at least partially, the ELG hypothesis, see, for example, Cardoso and Soukiazis (2008), Kristjanpoller and Olson (2014), and Tang, Lai, and Ozturk (2015).

² Usually called “GIPS”: Greece, Ireland, Portugal, and Spain.

³ We excluded from the EU28 Luxembourg and Bulgaria due, respectively, to a large amount of missing data and to observed high inflation bias previous to 1999.

⁴ http://unctadstat.unctad.org/ReportFolders/reportFolders.aspx.

⁵ http://data.worldbank.org/data-catalog/world-development-indicators.

⁶ http://data.worldbank.org/data-catalog/world-development-indicators.

Additional information

Funding

This research has been financed by the European Regional Development Fund through COMPETE 2020 – Programa Operacional Competitividade e Internacionalização (POCI) and by Portuguese public funds through FCT (Fundação para a Ciência e a Tecnologia) in the framework of the project POCI-01-0145-FEDER-006890.