Exports and Economic Growth in Developing Countries: Evidence from Time-Series and Cross-Section Data

An empirical assessment of the linkage between export performance and economic growth is important. Economic development is probably the most pressing issue in almost every part of the world. Theoretical positions on the export-growth nexus can, however, be very divergent. Standard propositions of the neoclassical type suggest that good export performance and "outward orientation" make major contributions to economic growth, for example, by (a) increasing specialization and expanding the efficiency-raising benefits of comparative advantage, (b) offering greater economies of scale due to an enlargement of the effective market size, (c) affording greater capacity utilization, and (d) inducing more rapid technological change. The "radical," neo-Marxist, or the left-leaning positions, on the other hand, suggest that trade between less-developed and industrialized countries, and, in particular, exports from the former to the latter, could constitute an important mechanism through which exploitation of the poorer countries occurs.1 In view of the importance of the subject and the wide divergence in theoretical positions, many empirical studies have been conducted to assess the role of exports in economic growth. Although the specific inferences differ somewhat, almost all empirical work seems to have concluded that exports are probably good for economic growth. Despite the differences in their methodologies and in the aspects emphasized, Balassa, Chenery, Emery, Feder, Kavoussi, Krueger, Michaely, Ram, Salvatore, and Tyler seem to be in general agreement about the beneficial effects of export performance on economic growth.2 The many existing studies on the subject have made useful contributions toward an understanding of the role of exports in economic