On Exports and Economic Growth-Multifarious Economies Perspective

Early studies on economic growth generally concluded that most economies are driven by exports hence forming the basis of the exports-led growth hypothesis (ELG). Thus by implication, previous studies document a positive relationship between exports and economic growth and major institutions such as the World Bank have supported the idea of promoting exports in Less Developed Countries (LDC’s) in their industrialization and economic transformation attempts. The glitch with the extant literature is that most empirical analysis usually focuses on a single economy without considering a broader data range and multifarious economies. This study uses data on GDP and income accrued from exports from 1960-2013 for 13 different economies. The results of the cointegration test show that there is a positive long run relationship between exports income and GDP for Brazil, Colombia, Costa Rica, Bangladesh, Burkina Faso, Nigeria, Australia and Norway. However, the causality test results astonishingly show that Argentina and Bangladesh are the only economies which are exports-driven hence opposing early claims that most countries follow the exports-led growth hypothesis.