On The Role Of Exports For Economic Growth At A Global Level Through A Lmm Approach

At a theoretical level, exports benefit a country’seconomy through contributing to aggregate demand and through positive externalities such as knowledge spillovers and economies of scale. In this research, we take a global approach and investigate the impact of a country’s exports importance at a macroeconomic level for its economic growth through the Linear mixed-effects method(LMM). We include 186 countries in our analysis and find that generally there is statistically significant evidence that the level of aggregate exports affects economic growth, but this relationship is both time and country specific. Thus, although countries that employ policies to encourage exports experience higher economic growth, on average, this positive relationship is stronger in some countries than in others, and even absent or negative in some instances. For a more thorough analysis, we also identify the group of developed G7 countries and that of developing CEE economies and estimate the relationship in comparative perspective. Results confirm that the positive impact of exports on growth is generally higher for CEE countries, for which exports seem to be the main factor to exert a positive influence on growth as opposed to the developed G7 economies, which seem to depend more on investments for growth.