Trade openness and economic growth: is growth export-led or import-led?

Abstract

Most previous investigations have only focused on the effect of export expansion on economic growth while ignoring the potential growth-enhancing contribution of imports. This article re-examines the relationship between trade and economic growth in Argentina, Colombia, and Peru with emphasis on both the role of exports and imports. Granger causality tests and impulse response functions were used to examine whether growth in trade stimulate economic growth (or vice versa). The results suggest that the singular focus of past studies on exports as the engine of growth may be misleading. Although there is some empirical evidence supporting export-led growth, the empirical support for import-led growth hypothesis is relatively stronger. In some cases, there is also evidence for reverse causality from gross domestic product growth to exports and imports.

Do Imports and Foreign Capital Inflows Lead Economic Growth? Cointegration and Causality Analysis in Pakistan

“…Import-led growth effect is also observed in Thangavelu and Rajaguru (2004) for India, Indonesia, Malaysia, the Philippines, Singapore and Taiwan. Similar findings are also noted in Awokuse (2007) for Poland and in Awokuse (2008) for some South American countries. On the other hand, Awokuse (2007) finds the opposite results for the Czech Republic.…”

Ensuring that Africa Keeps Rising: The Economic Integration Imperative

“…In the case of the first component of adding volume, the argument holds that trade liberalisation produces additional trade volumes. This argument is supported by a substantial literature and empirical evidence presented by numerous authors, dating back to Keesing (1967) and, in more recent times, inter alia, Giles and Williams (2000a;and 2000b) Samuelson and Nordhaus (2004), Awokuse (2008), Chan and Dang (2010) and Nain and Ahmad (2010), to mention a few.…”

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