Exports-led growth or growth-led exports in the case of China and Pakistan: An empirical investigation from the ARDL and Granger causality approach

ABSTRACT

There are various factors that determine and influence economic growth. From these, one of the most significant factors is exports, which play a vital role in the economic growth and development of a country. Trade theory states that exports enhance the growth of a domestic economy in various ways. This study attempts to empirically investigate the existence of the exports-led-growth (ELG) or growth-led-exports (GLE) hypotheses by adopting comparatively more contemporary techniques as compared to earlier classical approaches for China and Pakistan for the period of 1980 to 2015. The study found the existence of ELG for both China and Pakistan.

KEYWORDS:

• ARDL approach
• exports-led-growth hypothesis
• Granger causality approach
• Johansen and ARDL co-integration andlong-form tests
• stability and diagnostic analysis

Notes

¹ There is a unit root in the data.

² There isn’t a unit root in the data.