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Trade-led growth hypothesis: evidence from Latin America countries

Author

Listed:
  • Vinícius Luís Souza Nonato

    (Catholic University of Brasilia (UCB)
    Brazilian National Confederation of Industry (CNI))

  • Carlos Enrique Carrasco-Gutierrez

    (Catholic University of Brasilia (UCB))

Abstract

In this paper, we investigate the relationships between trade and labor productivity for nine Latin American countries in terms of the trade-led growth hypothesis. We use a vector error-correction model and perform independent tests of the short-run and long-run relationship among exports, imports and productivity to examine the direction of causality. The results show that exports and imports have impacts on labor productivity. We find evidence that the export‐led growth hypothesis is significant for Bolivia, Chile and Mexico; the growth‐led export hypothesis is significant for Uruguay; the import‐led growth hypothesis is relevant for Brazil, Colombia and Mexico; and the growth‐led import hypothesis is relevant for Brazil, Colombia and Uruguay. Finally, we note an important role of imports in the long-run development of these economies.

Suggested Citation

  • Vinícius Luís Souza Nonato & Carlos Enrique Carrasco-Gutierrez, 2023. "Trade-led growth hypothesis: evidence from Latin America countries," Empirical Economics, Springer, vol. 64(2), pages 727-745, February.
    • Handle: RePEc:spr:empeco:v:64:y:2023:i:2:d:10.1007_s00181-022-02266-w
    DOI: 10.1007/s00181-022-02266-w
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    References listed on IDEAS

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    More about this item

    Keywords

    Economic growth; Export-led growth; Import-led growth; Latin America; Cointegration; Causality;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • B23 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Econometrics; Quantitative and Mathematical Studies
    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics

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