Structural change in exports and economic growth: cointegration and causality analysis for Spain (1961–2000)

Abstract

The Spanish export-led growth hypothesis is re-examined from the trade liberalization process initiated four decades ago. For this purpose both the export expansion and the progression from ‘traditional’ exports to manufactured and semimanufactured exports are taken into consideration. A new evidence is reported for the above period. Alongside a feedback between aggregate exports and real output, it has been proved that the structural transformation in export composition has also become a key factor for Spain's economic development.

Acknowledgements

The authors would like to acknowledge financial support from the Ministerio de Ciencia y Tecnología (SEC 2002-03915, BEC 2002-02083) and the Instituto Valenciano de Investigaciones Económicas (IVIE).

Notes

¹A very important change of strategy came about in Spanish trade policy with the Stabilization and Liberalization Plan of 1959. This policy was characterized by the liberalization of imports leading to the acquisition of the necessary capital goods for the economy's productive expansion. Moreover, the golden parity of peseta at the International Monetary Fund was established and at the same time the decision of a devaluation from 42 pesetas per dollar to 60 pesetas per dollar was taken. Although the implementation of the plan was an important starting point, the exports takeoff should be placed between 1967 and beginning of 1970s. Three more factors influenced the initial boost: first, a new devaluation of domestic currency; secondly, a great expansion of international trade and thirdly, the gradual improvement and adaptation of export promoting programmes. The establishment of the former Export Promoting Institute in 1982 (currently, External Trade Institute) reflects a continued willingness of applying a policy of increasing exports. When Spain joined the European Union in 1986 its trade policy moved from a cooperation scenario to an integrated status with the rest of the member countries.

²In that previous paper, most real output and real export time series data are based on estimations carried out by Carreras (1989) and Tena (1989) respectively. The shorter span of the present paper allows us to directly resort to output in real terms and specific price indices for Spanish exports which can be collected from the International Financial Statistics. Probably, these price indices will enable nominal exports to be deflated in a more precise way.

³Moreno (1997) deals with the determinants of Spanish exports for different industrial sectors. His paper shows evidence about the fact that general technological and advertising effort have a significant effect on the evolution of exports of each one sector in the 1978–1989 period.

⁴In the beginning of the period, the scarce production of cars was oriented to the domestic market, nevertheless, during the last decade, the car exports represented almost 60% of total consumption exports (agricultural products are not included).

⁵The link between exports and economic growth has been the subject of considerable research in the last two decades. An excellent review about those studies can be seen in Shan and Sun (1998).

⁶See, for example, Amin Gutiérrez de Piñeres and Ferrantino (1997).

⁷See Romer (1986).

⁸Greenaway and Sapsford (1994) underline the endogenous nature of the export growth variable within an output growth equation since exports actually are themselves a component of output via the national income accounting identity. This is a problem that is fortunately overcome given that in the first place Johansen deals with all variables as potentially endogenous and secondly, again, all the variables of the model are treated symmetrically in the standard Granger causality test.

⁹Trends in the variables and in the data generation process were allowed for in estimation, nevertheless, the results were not practically sensitive to estimation method.