IDEAS home Printed from https://ideas.repec.org/p/unm/unumer/2008072.html
   My bibliography  Save this paper

Export Demand Elasticities as Determinants of Growth: Estimates for Mauritius

Author

Listed:
  • Habiyaremye, Alexis

    (UNU-MERIT)

  • Ziesemer, Thomas

    (UNU-MERIT, and Maastricht University)

Abstract

In this paper, we combine the export-led and import-led growth hypotheses in a growth model in which the importation of foreign capital goods and the demand elasticities of own export products explain the growth opportunities and the technical progress of developing countries. This model, based on imported capital goods uses Mauritius' data on capital investment, employment, export partners' growth and terms of trade to estimate price and income elasticities of export demand, total-factor productivity growth and economies of scale. These elasticities are then used to assess how the growth in export partners' income is converted into domestic growth. The implications of the presence of low or high export demand elasticities are discussed by relating them to various strands of trade and growth literature. Based on the results of this estimation, we also calculate steady-state growth rates, engine and handmaiden effects of growth as well as the dynamic steady-state gains from trade for this latecomer export economy. The implications of steady state results are also discussed in the light of the Mauritian employment and growth perspectives.

Suggested Citation

  • Habiyaremye, Alexis & Ziesemer, Thomas, 2008. "Export Demand Elasticities as Determinants of Growth: Estimates for Mauritius," MERIT Working Papers 2008-072, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    • Handle: RePEc:unm:unumer:2008072
    as

    Download full text from publisher

    File URL: https://unu-merit.nl/publications/wppdf/2008/wp2008-072.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Ganeshan Wignaraja, 2002. "Firm Size, Technological Capabilities and Market-oriented Policies in Mauritius," Oxford Development Studies, Taylor & Francis Journals, vol. 30(1), pages 87-104.
    2. Christine Mutz & Thomas Ziesemer, 2008. "Simultaneous estimation of income and price elasticities of export demand, scale economies and total factor productivity growth for Brazil," Applied Economics, Taylor & Francis Journals, vol. 40(22), pages 2921-2937.
    3. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    4. Balassa, Bela, 1978. "Exports and economic growth : Further evidence," Journal of Development Economics, Elsevier, vol. 5(2), pages 181-189, June.
    5. Bahmani-Oskooee, Mohsen & Miteza, Ilir, 2002. "Do nominal devaluations lead to real devaluations in LDCs?," Economics Letters, Elsevier, vol. 74(3), pages 385-391, February.
    6. Caselli, Francesco & Wilson, Daniel J., 2004. "Importing technology," Journal of Monetary Economics, Elsevier, vol. 51(1), pages 1-32, January.
    7. Shandre Mugan Thangavelu & Gulasekaran Rajaguru, 2004. "Is there an export or import-led productivity growth in rapidly developing Asian countries? a multivariate VAR analysis," Applied Economics, Taylor & Francis Journals, vol. 36(10), pages 1083-1093.
    8. David Roodman, 2009. "A Note on the Theme of Too Many Instruments," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 71(1), pages 135-158, February.
    9. Eaton, Jonathan & Kortum, Samuel, 2001. "Trade in capital goods," European Economic Review, Elsevier, vol. 45(7), pages 1195-1235.
    10. Luis Bértola & Hermes Higachi & Gabriel Porcile, 2002. "Balance-of-payments-constrained growth in Brazil: a test of Thirlwall's Law, 1890-1973," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 25(1), pages 123-140.
    11. Whitney K. Newey & Kenneth D. West, 1994. "Automatic Lag Selection in Covariance Matrix Estimation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 61(4), pages 631-653.
    12. Andrew B. Bernard & J. Bradford Jensen, 1999. "Exporting and Productivity," NBER Working Papers 7135, National Bureau of Economic Research, Inc.
    13. Francisco Rodríguez & Dani Rodrik, 2001. "Trade Policy and Economic Growth: A Skeptic's Guide to the Cross-National Evidence," NBER Chapters, in: NBER Macroeconomics Annual 2000, Volume 15, pages 261-338, National Bureau of Economic Research, Inc.
    14. Lamusse, Roland, 1980. "Labour policy in the plantation islands," World Development, Elsevier, vol. 8(12), pages 1035-1050, December.
    15. Lee, Jong-Wha, 1995. "Capital goods imports and long-run growth," Journal of Development Economics, Elsevier, vol. 48(1), pages 91-110, October.
    16. Khan, Mohsin S & Knight, Malcolm D, 1988. "Import Compression and Export Performance in Developing Countries," The Review of Economics and Statistics, MIT Press, vol. 70(2), pages 315-321, May.
    17. Kanta Marwah & Lawrence Klein, 1996. "Capital Inflow and Economic Growth," Carleton Economic Papers 96-04, Carleton University, Department of Economics, revised 1998.
    18. Fagerberg, Jan, 1988. "International Competitiveness: Errata," Economic Journal, Royal Economic Society, vol. 98(393), pages 1203-1203, December.
    19. Barba Navaretti, Giorgio & Soloaga, Isidro, 2001. "Weightless machines and costless knowledge - an empirical analysis of trade and technology diffusion," Policy Research Working Paper Series 2598, The World Bank.
    20. Joshua J. Lewer & Hendrik Van den Berg, 2003. "How Large Is International Trade’s Effect on Economic Growth?," Journal of Economic Surveys, Wiley Blackwell, vol. 17(3), pages 363-396, July.
    21. Ziesemer, Thomas HW, 1994. "Economic Development and Endogenous Terms-of-Trade Determination: Review and Reinterpretation of the Prebisch-Singer Thesis," MPRA Paper 54864, University Library of Munich, Germany.
    22. Fagerberg, Jan, 1988. "International Competitiveness," Economic Journal, Royal Economic Society, vol. 98(391), pages 355-374, June.
    23. Keller, Wolfgang, 2002. "Trade and the Transmission of Technology," Journal of Economic Growth, Springer, vol. 7(1), pages 5-24, March.
    24. Jagdish N. Bhagwati, 1978. "Anatomy of Exchange Control Regimes," NBER Chapters, in: Foreign Trade Regimes and Economic Development: Anatomy and Consequences of Exchange Control Regimes, pages 7-52, National Bureau of Economic Research, Inc.
    25. Esfahani, Hadi Salehi, 1991. "Exports, imports, and economic growth in semi-industrialized countries," Journal of Development Economics, Elsevier, vol. 35(1), pages 93-116, January.
    26. Balassa, Bela, 1985. "Exports, policy choices, and economic growth in developing countries after the 1973 oil shock," Journal of Development Economics, Elsevier, vol. 18(1), pages 23-35.
    27. repec:bla:econom:v:37:y:1970:i:148:p:373-85 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Thomas H. W. Ziesemer, 2023. "Semi-endogenous growth in a non-Walrasian DSEM for Brazil: estimation and simulation of changes in foreign income, human capital, R&D, and terms of trade," Economic Change and Restructuring, Springer, vol. 56(2), pages 1147-1183, April.
    2. Thomas H.W. Ziesemer, 2014. "Country terms of trade: trends, unit roots, over-differencing, endogeneity, time dummies, and heterogeneity," International Review of Applied Economics, Taylor & Francis Journals, vol. 28(6), pages 767-796, September.
    3. Thomas H. W. Ziesemer, 2011. "From Growth Regressions To Systems Of Equations," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 2(01), pages 121-137.
    4. Thomas Ziesemer, 2018. "Testing the Growth Links of Emerging Economies: Croatia in a Growing World Economy," Bulletin of Applied Economics, Risk Market Journals, vol. 5(1), pages 1-27.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Alexis Habiyaremye & Thomas H. W. Ziesemer, 2012. "Export demand elasticities and productivity as determinants of growth: estimates for Mauritius," Applied Economics, Taylor & Francis Journals, vol. 44(9), pages 1143-1158, March.
    2. repec:dgr:unumer:2008072 is not listed on IDEAS
    3. Christine Mutz & Thomas Ziesemer, 2008. "Simultaneous estimation of income and price elasticities of export demand, scale economies and total factor productivity growth for Brazil," Applied Economics, Taylor & Francis Journals, vol. 40(22), pages 2921-2937.
    4. Alexis Habiyaremye, 2013. "Imported Capital Goods and Manufacturing Productivity: Evidence from Botswana's Manufacturing Sector," South African Journal of Economics, Economic Society of South Africa, vol. 81(4), pages 581-604, December.
    5. Aleh Mazol, 2015. "Exchange Rate, Imports of Intermediate and Capital Goods and GDP Growth in Belarus," BEROC Working Paper Series 32, Belarusian Economic Research and Outreach Center (BEROC).
    6. Alexis Habiyaremye, 2008. "Economic Proximity and Technology Flows: South Africa's Influence and the Role of Technological Interaction in Botswana's Diversification Effort," WIDER Working Paper Series RP2008-92, World Institute for Development Economic Research (UNU-WIDER).
    7. Carlos A. Carrasco & Edgar Demetrio Tovar-García, 2021. "Trade and growth in developing countries: the role of export composition, import composition and export diversification," Economic Change and Restructuring, Springer, vol. 54(4), pages 919-941, November.
    8. Alexis Habiyaremye, 2019. "Enhancing productive capabilities through intra-regional trade and cross-border investments in Southern Africa," Development Southern Africa, Taylor & Francis Journals, vol. 36(4), pages 409-425, July.
    9. Amelia U. Santos‐Paulino, 2005. "Trade Liberalisation and Economic Performance: Theory and Evidence for Developing Countries," The World Economy, Wiley Blackwell, vol. 28(6), pages 783-821, June.
    10. Tarlok Singh, 2010. "Does International Trade Cause Economic Growth? A Survey," The World Economy, Wiley Blackwell, vol. 33(11), pages 1517-1564, November.
    11. Harrison, Ann E. & Rodriguez-Clare, Andres, 2009. "Trade, Foreign Investment, and Industrial Policy," MPRA Paper 15561, University Library of Munich, Germany.
    12. M. Herrerias & Vicente Orts, 2012. "Equipment investment, output and productivity in China," Empirical Economics, Springer, vol. 42(1), pages 181-207, February.
    13. Stefanescu, Razvan & Dumitriu, Ramona, 2014. "Investigation on the relationship between Romanian foreign trade and industrial production," MPRA Paper 62547, University Library of Munich, Germany.
    14. Harrison, Ann & Rodríguez-Clare, Andrés, 2010. "Trade, Foreign Investment, and Industrial Policy for Developing Countries," Handbook of Development Economics, in: Dani Rodrik & Mark Rosenzweig (ed.), Handbook of Development Economics, edition 1, volume 5, chapter 0, pages 4039-4214, Elsevier.
    15. Fagerberg, Jan & Srholec, Martin & Verspagen, Bart, 2010. "Innovation and Economic Development," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 2, chapter 0, pages 833-872, Elsevier.
    16. Maria Jesus Herrerias & Vicente Orts, 2011. "The driving forces behind China’s growth," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 19(1), pages 79-124, January.
    17. Osvaldo Lagares, 2016. "Capital, Economic Growth and Relative Income Differences in Latin America," Discussion Papers 16/03, Department of Economics, University of York.
    18. Maria Herrerias, 2010. "The causal relationship between equipment investment and infrastructures on economic growth in China," Frontiers of Economics in China, Springer;Higher Education Press, vol. 5(4), pages 509-526, December.
    19. Jaime Andrés Collazos & Pedro Luis Rosero, 2010. "¿Posee el Valle del Cauca una economía transformadora de importaciones orientadas a la Exportación?," Documentos de Políticas Públicas 6880, Universidad Icesi.
    20. R. Rijesh, 2015. "Technology Import and Manufacturing Productivity in India: Firm Level Analysis," Journal of Industry, Competition and Trade, Springer, vol. 15(4), pages 411-434, December.
    21. Ritu Rani & Naresh Kumar, 2018. "Is There an Export- or Import-led Growth in BRICS Countries? An Empirical Investigation," Jindal Journal of Business Research, , vol. 7(1), pages 13-23, June.

    More about this item

    Keywords

    growth models; trade; capital goods; exports; total factor productivity;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:unm:unumer:2008072. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ad Notten (email available below). General contact details of provider: https://edirc.repec.org/data/meritnl.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.