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The Stability of Export-led Growth Hypothesis: Evidence from Asia's Four Little Dragons

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  • Tang, Chor Foon
  • Lai, Yew Wah

Abstract

The objective of this study is to re-investigate the export-led growth hypothesis for Asia’s Four Little Dragons using cointegration and rolling causality analyses. Employing both bivariate (exports and GDP) and trivariate (exports, GDP and exchange rate) models, the study finds that exports and GDP are cointegrated for all the four economies, implying that there is a long run relationship between the variables. However, the MWALD causality test results differ between the bivariate and trivariate models. The export-led growth hypothesis is valid only for the case of Hong Kong and Singapore in the bivariate model but valid for all four economies in the trivariate model. Furthermore, the rolling regression-based MWALD test shows that export-led growth in each of the four economies is not stable over their respective period of analysis.

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  • Tang, Chor Foon & Lai, Yew Wah, 2011. "The Stability of Export-led Growth Hypothesis: Evidence from Asia's Four Little Dragons," MPRA Paper 27962, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:27962
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    2. Muhammad Shafiullah & Ravinthirakumaran Navaratnam, 2016. "Do Bangladesh and Sri Lanka Enjoy Export-Led Growth? A Comparison of Two Small South Asian Economies," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 17(1), pages 114-132, March.

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    More about this item

    Keywords

    Asia’s Four Little Dragons; Export-led growth; Rolling MWALD test;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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