International Economics

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Browsing International Economics by Author "Adem, Mohammed"

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    Analysis of Causality and Export-Led Growth Hypothesis (ELGH) in Ethiopia
    (A.A.U, 2005-07) Adem, Mohammed; Yoseph, Getachew ( Ato)
    It is generally believed that for a developing country export performance plays a pivotal role in providing the much-needed impetus for economic growth. Export-led growth has been put forward as the efficient alternative to inward- orientation strategies of development. This is because it is believed to lead to higher total-factor-productivity growth and encourage foreign direct investment. In spite of the presence of numerous studies on the relationship between exports and economic growth, empirical investigations to-date have produced mixed or contradictory results; while most cross-section studies have found a positive association between export and growth, a considerable number of time series methodologies found mixed results, either supporting or rejecting the export-led growth hypothesis. This paper examines the Export-led growth hypothesis (ELGH) for Ethiopia for the period 1960-2004. It builds up on Feder's (1983) model to investigate empirically the relationship between exports and economic (GDP) growth using recent data from the National Bank of Ethiopia. The study finds that the ELGH is valid in this particular case but, only in the long run. Although the results of the study suggest that exports have a positive effect on the overall rate of economic growth and could be considered an "engine of growth" as the ELGH advocates, their impact was not, however, statistically supported in the short-run. , Moreover, causality was found running from GDP to Export confirming uni-directional causality.