Export growth and output growth: An application of bounds testing approach

The short-run and the long-run relationship between export growth and economic growth has received a great deal of attention in the literature. Cointegration techniques that have been employed by previous researchers require that the variables to be non-stationary but their linear combination to be stationary. When variables are not integrated of the same order, they are excluded from analysis. This needs not to be the case with the introduction of the bounds testing approach. Indeed, the approach does not require pre-unit-root testing. This paper applies this new method to export and output data from 44 developing countries and provides support for the export-led growth hypothesis in 60% of the countries. Copyright Springer 2007