relation export and economic growth

Better Essays

1535 AN EMPIRICAL EXAMINATION OF THE EXPORT-LED GROWTH HYPOTHESIS IN TURKEY1 Sami TABAN*, İsmail AKTAR** ABSTRACT The export-led growth [ELG] hypothesis postulates a causal connection between export and growth. This study investigates ELG hypothesis using quarterly time series data for the period 1980:1-2007:2 in Turkey. The hypothesis is tested by applying the cointegration and error correction procedures. We find an evidence to support the hypothesis that there is a long-run and short-run bidirectional causality relationship between export growth and real GDP growth in Turkey. Key Words: Export-Led Growth Hypothesis, coingration, Turkey. 1. INTRODUCTION The economic policy implemented immediately after the independence …show more content…

It is also the source of the foreign exchanges that are very scarce in most developing countries throughout the world. With these foreign exchanges, it could import better quality inputs and more capitals. Of course, these entirely shift the country’s production possibility curve further. The remainder of the paper is organized as following. Section 2 briefly explains what export-led growth hypothesis is about. Section 3 deals with the empirical studies. Section 4 Taban, Aktar, 2008 1537 gives the details the methodological issues and about data set. Section 5 gives the concluding marks. 2. EXPORT-LED GROWTH [ELG] HYPOTHESIS Ricardo’s theory of comparative advantage explains that countries should specialize in the production of commodities that they are most efficient at producing in relation to other countries, and trade those commodities with the rest of the world. It is possible to say that a country can export its commodities and consequently raise foreign currency, with which it can import the other commodities in need. The better a country is at producing its specialized commodities, the more revenue it will raise from its exports and the more it will be able to procure imports. This trade theory has given birth to a new direction for economic policy, namely the export-led growth [ELG] hypothesis (Zuniga, 2000). The ELG hypothesis postulates that export expansion is a key

Get Access