Causality Between Productivity and Exports in Agriculture: Evidence From Asia and Latin America

Abstract

This paper examines the causal relationship between agricultural productivity and exports for selected Asian and Latin American countries. Alternative views about the causal relationship between these variables of economic interest exist. Economic theory provides no firm basis to judge whether productivity causes exports or exports cause productivity (export‐led growth). Since this issue is empirical, econometric tests are utilised to investigate the nature of this causality. Test results are mixed although the export‐led growth hypothesis is validated in a few cases.

Exports, imports and economic growth in South Korea and Japan: a tale of two economies

“…In relation to the countries that are of specific interest to this study, there have been fourteen time-series empirical studies examining the relationship between exports and economic growth for South Korea (Jung and Marshall, 1985;Chow, 1987;BahmaniOskooee et al, 1991;Bahmani-Oskooee and Alse, 1993;Dodaro, 1993;Arnade and Vasavada, 1995;Dutt and Ghosh, 1996;Riezman et al, 1996;Rahman and Mustafa, 1997;Islam, 1998;Ekanayake, 1999;Anoruo and Ramchander, 2000;Kónya, 2004;Awokuse, 2005a). However, among these studies only Bahmani-Oskooee and Alse (1993) and Awokuse (2005a) use quarterly data and both find evidence of bi-directional causality.…”

“…However, among these studies only Bahmani-Oskooee and Alse (1993) and Awokuse (2005a) use quarterly data and both find evidence of bi-directional causality. In contrast, over a third apply a multivariate analysis which supports the hypotheses of export-led growth (Riezman et al, 1996;Islam, 1998), growth-led exports (Arnade and Vasavada, 1995), bi-directional causality (Anoruo and Ramchander, 2000;Awokuse, 2005a) and increased output growth leading to reduced exports (Kónya, 2004). Additionally, when undertaking bivariate analysis, studies reported bi-directional causality (Chow, 1987;Bahmani-Oskooee et al, 1991;Bahmani-Oskooee and Alse, 1993;Rahman and Mustafa, 1997;Ekanayake, 1999), non-causality (Dodaro, 1993;Dutt and Ghosh, 1996;Riezman et al, 1996;Islam, 1998) and that increased output growth leads to a decrease in export growth (Jung and Marshall, 1985;Kónya, 2004).…”

“…Additionally, when undertaking bivariate analysis, studies reported bi-directional causality (Chow, 1987;Bahmani-Oskooee et al, 1991;Bahmani-Oskooee and Alse, 1993;Rahman and Mustafa, 1997;Ekanayake, 1999), non-causality (Dodaro, 1993;Dutt and Ghosh, 1996;Riezman et al, 1996;Islam, 1998) and that increased output growth leads to a decrease in export growth (Jung and Marshall, 1985;Kónya, 2004). Furthermore, several studies investigate the Granger causality test using the error correction model with bi-directional causality detected (Bahmani-Oskooee and Alse, 1993;Rahman and Mustafa, 1997;Ekanayake, 1999;Anoruo and Ramchander, 2000;Awokuse, 2005a), while evidence of non-causality (Dutt and Ghosh, 1996) and growth-led exports (Arnade and Vasavada, 1995) Toda and Yamamoto (1995) to reveal a negative link running from GDP to exports. In contrast, the standard Granger causality test is used in the majority of studies (Jung and Marshall, 1985;Bahmani-Oskooee et al, 1991;Dodaro, 1993;Riezman et al, 1996;Islam, 1998), which report bi-directional causality in bivariate analysis (Bahmani-Oskooee et al, 1991), negative correlation (Jung and Marshall, 1985), export-led growth in multivariate analysis (Riezman et al, 1996;Islam, 1998) and non-causality (Dodaro, 1993).…”

“…For Japan we have identified thirteen time-series studies (Grabowski et al, 1990;Marin, 1992;Arnade and Vasavada, 1995;Boltho, 1996;Dutt and Ghosh, 1996;Riezman et al, 1996;Rahman and Mustafa, 1997;Islam, 1998;Yamada, 1998;Hatemi-J, 2002;Kónya, 2004;Thangavelu and Rajaguru, 2004;Awokuse, 2005b). However, in contrast to those for South Korea, approximately one-third employ quarterly data, from which they either detect no export-led growth (Yamanda, 1998), growth-led exports (Awokuse, 2005b), or bi-directional causality (Marin, 1992;Hatemi-J, 2002).…”

“…However, in contrast to those for South Korea, approximately one-third employ quarterly data, from which they either detect no export-led growth (Yamanda, 1998), growth-led exports (Awokuse, 2005b), or bi-directional causality (Marin, 1992;Hatemi-J, 2002). Of the studies applying multivariate analysis, a mixed series of findings emerge supporting export-led growth (Grabowski et al, 1990;Islam, 1998), growth-led exports (Riezman et al, 1996;Kónya, 2004;Thangavelu and Rajaguru, 2004;Awokuse, 2005b), bi-directional causality (Marin, 1992) and non-causality (Arnade and Vasavada, 1995), whilst oneway causation from exports to growth is examined by Yamanda (1998), but finds no evidence for export-led growth. In contrast, bivariate analysis finds evidence for exportled growth (Rahman and Mustafa, 1997;Islam, 1998), growth-led exports (Boltho, 1996;Riezman et al, 1996;Kónya, 2004), bi-directional causality (Hatemi-J, 2002) and noncausality (Dutt and Ghosh, 1996).…”