Export and growth: a linkage effect perspective

Purpose – The purpose of this paper is to examine how the linkage effect provides a better understanding of export‐led growth hypothesis in developing countries. Design/methodology/approach – The literature review on the externalities of export‐led growth implied a hypothesis that the higher the linkage effect of export manufacture or industry is, the greater the externality effect and the faster the export growth of it will be in developing countries. The export growth pattern of the Hong Kong electronics industry and some selected data from China's export manufactures have been used to verify the hypothesis. Findings – The findings have strongly supported the research hypothesis at both the product and industry level. Originality/value – In the ELG model, it is the externality and the linkage effect of export that lead to the output growth of an economy. The findings have illustrated that the ELG model cannot simply be based on the effect of the amount of export or the export growth rate, rather the externality and the linkage effect of export should also be incorporated into the model.