Exports imports and economic growth : empirical results from selected countries

Abstract

The relationships among exports, imports and economic growth in developed and developing countries have been of continuing interest both in theoretical and empirical literature. A large number of empirical studies have been conducted during the last two decades to investigate the role of exports on economic growth or the export-led growth hypothesis using either time-series or cross-section data, other studies have been conducted whether or not imports hinder or help economic growth. The objective of this paper is to investigate the casual relationship for four developed market economies (United States of America, Japan, Ireland and Singapore) and for four developing market economies (Malaysia, Pakistan, Argentina and Indonesia) based on causality tests. There is an ongoing debate on whether increased trade spurs growth and industrialization, or whether it is economic growth that enables trade to increase. The implicit question with respect to developing and developed countries is whether the major sources of growth and industrialization are external (learning through trade generally or exports or imports specifically) or internal (through human and physical capital investment and increased research and development).