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Testing the Olson Hypothesis within the Australian Context

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  • Andrew Marks
  • Mehdi Sadeghi

Abstract

This article seeks to empirically test whether the Olson hypothesis is applicable in the Australian context. Both cointegration and regression analyses which are utilised for this purpose provide strong support for this hypothesis; that is, the existence of a statistically significant negative relationship between import protection and the proportion of manufactured goods exported. More specifically, it is revealed that falling levels of import protection have underpinned an increase in the proportion of manufacturing goods exported and hence assisted in improving the manufacturing sector’s export orientation in the period 1980:1–1996:2. A particularly important dimension of the empirical results is the strengthening of this relationship in the more recent years to 1996:2. This phenomenon probably indicates the favourable impact of the accumulated reduction in the protection levels since the early 1970s.

Suggested Citation

  • Andrew Marks & Mehdi Sadeghi, 1998. "Testing the Olson Hypothesis within the Australian Context," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 31(2), pages 130-144, June.
    • Handle: RePEc:bla:ausecr:v:31:y:1998:i:2:p:130-144
    DOI: 10.1111/1467-8462.00059
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    References listed on IDEAS

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    1. Gordon Menzies, 1994. "Explaining the Timing of Australia's Manufactured Export Boom," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 27(4), pages 72-86, October.
    2. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
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