The export-led growth hypothesis (ELGH) has been extensively explored; however, previous studies have predominantly relied on standard integration and cointegration techniques, and empirical evidence supporting the ELGH remains inconclusive. This research re-examined the ELGH for developed economies using advanced fractional methods. By analyzing quarterly data on GDP, real effective exchange rates, and goods exports for 27 OECD countries from 1995 to 2021, our study showed that conventional cointegration methods may overlook significant long-run relationships. In contrast, the fractional approach offers a more flexible and accurate estimation of the trade-growth nexus. These findings underscore the importance of refined econometric methods in international trade research, particularly for evaluating the long-term effects of exports on economic performance.
Citation: Jorge V. Pérez-Rodríguez, Heiko Rachinger, Maria Santana-Gallego. Revisiting the export-led growth hypothesis for OECD countries. A fractionally integrated heterogeneous panel data framework[J]. National Accounting Review, 2025, 7(2): 221-248. doi: 10.3934/NAR.2025010
The export-led growth hypothesis (ELGH) has been extensively explored; however, previous studies have predominantly relied on standard integration and cointegration techniques, and empirical evidence supporting the ELGH remains inconclusive. This research re-examined the ELGH for developed economies using advanced fractional methods. By analyzing quarterly data on GDP, real effective exchange rates, and goods exports for 27 OECD countries from 1995 to 2021, our study showed that conventional cointegration methods may overlook significant long-run relationships. In contrast, the fractional approach offers a more flexible and accurate estimation of the trade-growth nexus. These findings underscore the importance of refined econometric methods in international trade research, particularly for evaluating the long-term effects of exports on economic performance.
| [1] |
Abual-Foul B (2004) Testing the export-led growth hypothesis: Evidence from Jordan. Appl Econ Lett 11: 393–396. https://doi.org/10.1080/1350485042000228268 doi: 10.1080/1350485042000228268
|
| [2] |
Aslan A, Topcu E (2018) The relationship between export and growth: Panel data evidence from Turkish sectors. Economies 6. https://doi.org/10.3390/economies6020022 doi: 10.3390/economies6020022
|
| [3] |
Bahmani-Oskooee M, Economidou C (2009) Export-led growth vs. growth-led exports: LDCs experience. J Dev Areas 42: 179–212. https://doi.org/10.1353/jda.0.0030 doi: 10.1353/jda.0.0030
|
| [4] | Bahmani-Oskooee M, Economidou C, Goswami GG (2005) Export Led Growth Hypothesis Revisited: A Panel Cointegration Approach. Sci J Admin Dev 3: 40–55. |
| [5] |
Balassa B (1978) Exports and economic growth: Further evidence. J Dev Econ 5: 181–189. https://doi.org/10.1016/0304-3878(78)90006-8 doi: 10.1016/0304-3878(78)90006-8
|
| [6] |
Blomquist J, Westerlund J (2013) Testing slope homogeneity in large panels with serial correlation. Econ Lett 121: 374–378. https://doi.org/10.1016/j.econlet.2013.09.012 doi: 10.1016/j.econlet.2013.09.012
|
| [7] |
Bodman MP (1996) On export-led growth in Australia and Canada: Cointegration, causality and structural stability. Aust Econ Pap 35: 282–299. https://doi.org/10.1111/j.1467-8454.1996.tb00051.x doi: 10.1111/j.1467-8454.1996.tb00051.x
|
| [8] | Breitung J (2000) The local power of some unit root tests for panel data, In: Baltagi, B. (Ed.), Nonstationary panels, panel cointegration, and dynamic panels, Advances in Econometrics, Emerald Group Publishing, 15: 61–178. https://doi.org/10.1016/S0731-9053(00)15006-6 |
| [9] |
Buchinskaya ON, Dyatel EP (2019) Influence of high-technology exports and foreign charges for the use of intellectual property on economic growth. J New Econ 20: 114–126. https://doi.org/10.29141/2073-1019-2019-20-2-7 doi: 10.29141/2073-1019-2019-20-2-7
|
| [10] |
Buffie E (1992) On the condition for export-led growth. Can J Econ 25: 211–225. https://doi.org/10.2307/135720 doi: 10.2307/135720
|
| [11] |
Choi I (2001) Unit root tests for panel data. J Int Money Finan 20: 249–272. https://doi.org/10.1016/S0261-5606(00)00048-6 doi: 10.1016/S0261-5606(00)00048-6
|
| [12] |
Chudik A, Pesaran MH (2015) Common correlated effects estimation of heterogeneous dynamic panel data models with weakly exogenous regressors. J Econom 188: 393–420. https://doi.org/10.1016/j.jeconom.2015.03.007 doi: 10.1016/j.jeconom.2015.03.007
|
| [13] |
Chudik A, Pesaran MH, Tosetti E (2011) Weak and strong cross-section dependence and estimation of large panels. Econom J 14: C45–C90. https://doi.org/10.1111/j.1368-423X.2010.00330.x doi: 10.1111/j.1368-423X.2010.00330.x
|
| [14] | Chudik A, Mohaddes K, Pesaran MH, et al. (2016) Long-run effects in large heterogeneous panel data models with cross-sectionally correlated errors, In: Essays in Honor of Aman Ullah (Advances in Econometrics), 36: 85–135. https://doi.org/10.1108/S0731-905320160000036013 |
| [15] |
Dawson PJ (2005) Agricultural exports and economic growth in less developed countries. Agric Econ 33: 145–152. https://doi.org/10.1111/j.1574-0862.2005.00358.x doi: 10.1111/j.1574-0862.2005.00358.x
|
| [16] |
Demir O (2018). Does high tech exports really matter for economic growth? A panel approach for upper middle-income economies. AJIT-e: Online Academic J Inf Technol 9: 43–54. https://doi.org/10.5824/1309-1581.2018.1.003.x doi: 10.5824/1309-1581.2018.1.003.x
|
| [17] |
Dittman I (2000) Residual-based tests for fractional cointegration: A Monte Carlo study. J Time Ser Anal 21: 615–647. https://doi.org/10.1016/j.econlet.2014.11.009 doi: 10.1016/j.econlet.2014.11.009
|
| [18] | Ditzen J (2019) Estimating long run effects in models with cross-sectional dependence using xtdcce2. CEERP Working Paper Series 7. |
| [19] |
Ditzen J (2021) Estimating long run effects and the exponent of cross-sectional dependence: An update to xtdcce2. Stata J 21. https://doi.org/10.1177/1536867X211045560 doi: 10.1177/1536867X211045560
|
| [20] |
Dreger C, Herzer D (2013) A further examination of the export-led growth hypothesis. Empir Econ 45: 39–60. https://doi.org/10.1007/s00181-012-0602-4 doi: 10.1007/s00181-012-0602-4
|
| [21] |
Dumitrescu EI, Hurlin C (2012) Testing for Granger non-causality in heterogeneous panels. Econ Model 29: 1450–1460. https://doi.org/10.1016/j.econmod.2012.02.014 doi: 10.1016/j.econmod.2012.02.014
|
| [22] | Dutt D, Ghosh D (1996) The export growth-economic growth nexus: A causality analysis. J Dev Areas 30: 167–182. https://www.jstor.org/stable/4192538 |
| [23] |
Engle RF, Granger CWJ (1987) Co-integration and error correction: Representation, estimation, and testing. Econometrica 55: 251–276. https://doi.org/10.2307/1913236 doi: 10.2307/1913236
|
| [24] |
Ergemen YE, Velasco C (2017) Estimation of fractionally integrated panels with fixed-effects and cross-section dependence. J Econom 196: 248–258. https://doi.org/10.1016/j.jeconom.2016.05.020 doi: 10.1016/j.jeconom.2016.05.020
|
| [25] |
Emirmahmutoglu F, Kose N (2011) Testing for Granger causality in heterogeneous mixed panels. Econ Model 28: 870–876. https://doi.org/10.1016/j.econmod.2010.10.018 doi: 10.1016/j.econmod.2010.10.018
|
| [26] |
Falk M (2009) High-tech exports and economic growth in industrialized countries. Appl Econ Lett 16: 1025–1028. https://doi.org/10.1080/13504850701222228 doi: 10.1080/13504850701222228
|
| [27] |
Fischer C, Gil-Alana LA (2009) The nature of the relationship between international tourism and international trade: The case of German imports of Spanish wine. Appl Econ 41: 1345–1359. https://doi.org/10.1080/00036840601019349 doi: 10.1080/00036840601019349
|
| [28] | Gil-Alana LA, Hualde J (2009) Fractional integration and cointegration: An overview and an empirical application, In: Mills, T.C., Patterson, K. (Eds.), Palgrave Handbook of Econometrics, Palgrave Macmillan. https://doi.org/10.1057/9780230244405_10 |
| [29] |
Gil-Alana LA, Mudida R, de Gracia FP (2014) Persistence, long memory and seasonality in Kenyan tourism series. Ann Touris Res 46: 89–101. https://doi.org/10.1016/j.annals.2014.02.008 doi: 10.1016/j.annals.2014.02.008
|
| [30] |
Giles JA, Williams CL (2000) Export-led growth: A survey of the empirical literature and some non-causality results. Part 1. J Int Trade Econ Dev 9: 261–337. https://doi.org/10.1080/09638190050086177 doi: 10.1080/09638190050086177
|
| [31] | Grossman GM, Helpman E (1991) Innovation and Growth in the Global Economy, MIT Press. |
| [32] |
Hadri K (2000) Testing for stationarity in heterogeneous panel data. Econom J 3: 148–161. https://doi.org/10.1111/1368-423X.00043 doi: 10.1111/1368-423X.00043
|
| [33] |
Hagemejer J, Mućk J (2019) Export-led growth and its determinants: Evidence from CEEC countries. World Econ 42: 1994–2025. https://doi.org/10.1111/twec.12790 doi: 10.1111/twec.12790
|
| [34] | Helpman E, Krugman P (1985) Market Structure and Foreign Trade, MIT Press. |
| [35] |
Herzer D, Nowak-Lehmann F, Siliverstovs B (2006) Export-led growth in Chile: Assessing the role of export composition in productivity growth. Dev Econ 43: 306–328. https://doi.org/10.1111/j.1746-1049.2006.00019.x doi: 10.1111/j.1746-1049.2006.00019.x
|
| [36] | Hualde J, Nielsen MØ (2023) Fractional integration and cointegration. Fractional Integration and Cointegration, In: Oxford Research Encyclopedia of Economics and Finance. https://doi.org/10.1093/acrefore/9780190625979.013.639 |
| [37] |
Im KS, Pesaran MH, Shin Y (2003) Testing for unit roots in heterogeneous panels. J Econom 115: 53–74. https://doi.org/10.1016/S0304-4076(03)00092-7 doi: 10.1016/S0304-4076(03)00092-7
|
| [38] |
Islam MS (2022) Does the trade‐led growth hypothesis exist for South Asia? A pooled mean group estimation. Reg Sci Policy Pract 14: 244–258. https://doi.org/10.1111/rsp3.12481 doi: 10.1111/rsp3.12481
|
| [39] |
Islam MS, Alsaif SS, Alsaif T (2022) Trade openness, government consumption, and economic growth nexus in Saudi Arabia: ARDL cointegration approach. Sage Open 12. https://doi.org/10.1177/21582440221096661 doi: 10.1177/21582440221096661
|
| [40] |
Islam MS (2023) Does an export‐led growth proposition exist for Bangladesh's ready‐made garments sector? A nonlinear ARDL approach. Reg Sci Policy Pract 15: 939–956. https://doi.org/10.1111/rsp3.12557 doi: 10.1111/rsp3.12557
|
| [41] |
Jin JC (1995) Export-led growth and the four little dragons. J Int Trade Econ Dev 4: 203–215. https://doi.org/10.1080/09638199500000017 doi: 10.1080/09638199500000017
|
| [42] |
Jun S (2007) Bi-directional relationships between exports and growth: A panel cointegration analysis. J Econ Res 12: 133–171. https://doi.org/10.17256/jer.2007.12.2.002 doi: 10.17256/jer.2007.12.2.002
|
| [43] |
Hausmann R, Hwang J, Rodrik D (2007) What you export matters. J Econ Growth 12: 1–25. https://doi.org/10.3386/w11905 doi: 10.3386/w11905
|
| [44] | Hausmann R (2024) Export-led growth. Growth Lab Working Papers 231 Harvard's Growth Lab. |
| [45] |
Konya L (2008). Export-Led Growth or Growth-Driven Export? New Evidence from Granger Causality Analysis on OECD Countries. Appl Econom Int Dev 4. https://doi.org/10.2139/ssrn.254090 doi: 10.2139/ssrn.254090
|
| [46] |
Kónya L (2006) Exports and growth: Granger causality analysis on OECD countries with panel data approach. Econ Model 23: 978–992. https://doi.org/10.1016/j.econmod.2006.04.008 doi: 10.1016/j.econmod.2006.04.008
|
| [47] |
Krugman PR (1979) Increasing returns, monopolistic competition, and international trade. J Int Econ 9: 469–479. https://doi.org/10.1016/0022-1996(79)90017-5 doi: 10.1016/0022-1996(79)90017-5
|
| [48] |
Lall S (2020) The technological structure and performance of developing country manufactured exports, 1985–98. Oxf Dev Stud 28: 337–369. https://doi.org/10.1080/713688318 doi: 10.1080/713688318
|
| [49] |
Levin A, Lin CF, Chu CSJ (2002) Unit root tests in panel data: Asymptotic and finite-sample proper. J Econom 108: 1–24. https://doi.org/10.1016/S0304-4076(01)00098-7 doi: 10.1016/S0304-4076(01)00098-7
|
| [50] |
Lim SY, Ho CM (2013) Nonlinearity in ASEAN-5 export-led growth model: Empirical evidence from nonparametric approach. Econ Model 32: 136–145. https://doi.org/10.1016/j.econmod.2013.01.044 doi: 10.1016/j.econmod.2013.01.044
|
| [51] | McCombie JSL, Roberts M (2002) The role of the balance of payments in economic growth: Another look at the Harrod trade multiplier. Rev Polit Econ 14: 429–449. |
| [52] | McCombie JSL, Thirlwall AP (2004) Essays on Balance of Payments Constrained Growth: Theory and Evidence, Routledge. |
| [53] |
Maddala GS, Wu S (1999) A comparative study of unit root tests with panel data and a new simple test. Oxf Bull Econ Stat 61: 631–652. https://doi.org/10.1111/1468-0084.0610s1631 doi: 10.1111/1468-0084.0610s1631
|
| [54] |
Marin D (1992) Is the export-led growth hypothesis valid for industrialized countries? Rev Econ Stat 74: 678–688. https://doi.org/10.2307/2109382 doi: 10.2307/2109382
|
| [55] | Medina-Smith EJ (2000) Is the export-led growth hypothesis valid for developing countries? A case study of Costa Rica. Policy Issues in International Trade and Commodities Study Series, 7, United Nations Conference on Trade and Development. |
| [56] |
Melitz MJ (2003) The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity. Econometrica 71: 1695–1725. https://doi.org/10.1111/1468-0262.00467 doi: 10.1111/1468-0262.00467
|
| [57] | Mishra PK (2011) The dynamics of relationship between exports and economic growth in India. Int J Econ Sci Appl Res 4: 53–57. https://hdl.handle.net/10419/66632 |
| [58] |
Nguyen HT, Örsal DDK (2020) A new and benign hegemon on the horizon? The Chinese century and growth in the Global South. Economics 14. http://dx.doi.org/10.5018/economics-ejournal.ja.2020-12 doi: 10.5018/economics-ejournal.ja.2020-12
|
| [59] |
Odhiambo NM (2022) Is export-led growth hypothesis still valid for sub-Saharan African countries? New evidence from panel data analysis. Eur J Manag Bus Econ 31: 77–93. https://doi.org/10.1108/ejmbe-06-2020-0156 doi: 10.1108/ejmbe-06-2020-0156
|
| [60] | OECD (2022) Quarterly National Accounts. OECD Stats. Available from: https://stats.oecd.org/Index.aspx?DataSetCode = QNA%20. |
| [61] | Palley TI (2012) The rise and fall of export-led growth. Investigación Económica 71: 141–161. |
| [62] |
Parida PC, Sahoo P (2007) Export-led growth in South Asia: A panel cointegration analysis. Int Econ J 21: 155–175. https://doi.org/10.1080/10168730701345414 doi: 10.1080/10168730701345414
|
| [63] |
Parteka A (2020) What drives cross-country differences in export variety? A bilateral panel approach. Econ Model 92: 48–56. https://doi.org/10.1016/j.econmod.2020.07.001 doi: 10.1016/j.econmod.2020.07.001
|
| [64] |
Pedroni P (1999) Critical values for cointegration tests in heterogeneous panels with multiple regressors. Oxf Bull Econ Stat 61: 653–670. https://doi.org/10.1111/1468-0084.0610s1653 doi: 10.1111/1468-0084.0610s1653
|
| [65] |
Pedroni P (2004) Panel cointegration: Asymptotic and finite sample properties of pooled time series tests with an application to the PPP hypothesis. Economet Theory 20: 597–625. https://doi.org/10.1017/S0266466604203073 doi: 10.1017/S0266466604203073
|
| [66] |
Pérez-Rodríguez JV, Rachinger H, Santana-Gallego M (2021) Testing the validity of the tourism-led growth hypothesis under long-range dependence. Curr Issues Tour 24: 768–793. https://doi.org/10.1080/13683500.2020.1744537 doi: 10.1080/13683500.2020.1744537
|
| [67] |
Pérez-Rodríguez JV, Rachinger H, Santana-Gallego M (2022) Does tourism promote economic growth? A fractionally integrated heterogeneous panel data analysis. Tour Econ 28: 1355–1376. https://doi.org/10.1177/13548166209806 doi: 10.1177/13548166209806
|
| [68] |
Pesaran MH (2006) Estimation and inference in large heterogeneous panels with multifactor error structure. Econometrica 74: 967–1012. https://doi.org/10.1111/j.1468-0262.2006.00692.x doi: 10.1111/j.1468-0262.2006.00692.x
|
| [69] |
Pesaran MH (2007) A simple panel unit root test in the presence of cross-section dependence. J Appl Econom 22: 265–312. https://doi.org/10.1002/jae.951 doi: 10.1002/jae.951
|
| [70] |
Pesaran MH (2015) Testing weak cross-sectional dependence in large panels. Econom Rev 34: 1089–1117. https://doi.org/10.1080/07474938.2014.956623 doi: 10.1080/07474938.2014.956623
|
| [71] |
Ribeiro Ramos FF (2001) Exports, imports, and economic growth in Portugal: Evidence from causality and cointegration analysis. Econ Model 18: 613–623. https://doi.org/10.1016/S0264-9993(00)00055-9 doi: 10.1016/S0264-9993(00)00055-9
|
| [72] |
Ribeiro AP, Carvalho V, Santos P (2016) Export-led growth in the EU: Where and what to export? Int Trade J 30: 319–344. https://doi.org/10.1080/08853908.2016.1197806 doi: 10.1080/08853908.2016.1197806
|
| [73] |
Robinson PM (1995) Gaussian semiparametric estimation of long range dependence. Ann Stat 23: 1630–1661. https://doi.org/10.1214/aos/1176324317 doi: 10.1214/aos/1176324317
|
| [74] |
Romer P (1990) Endogenous technological change. J Polit Econ 98: S71–S102. https://doi.org/10.1086/261725 doi: 10.1086/261725
|
| [75] |
Romero JP, McCombie JSL (2016) The Multi-Sectoral Thirlwall's Law: evidence from 14 developed European countries using product-level data. Int Rev Appl Econ 30: 301–325. https://doi.org/10.1080/02692171.2015.1102207 doi: 10.1080/02692171.2015.1102207
|
| [76] |
Sahoo AK, Sahoo D, Sahu NC (2014) Mining export, industrial production and economic growth: A cointegration and causality analysis for India. Resour Policy 42: 27–34. https://doi.org/10.1016/j.resourpol.2014.09.001 doi: 10.1016/j.resourpol.2014.09.001
|
| [77] |
Sannassee RV, Seetanah B, Jugessur J (2014) Export-led growth hypothesis: A meta-analysis. J Dev Areas 48: 361–385. https://doi.org/10.1353/jda.2014.0018 doi: 10.1353/jda.2014.0018
|
| [78] |
Seok JH, Moon H (2021) Agricultural exports and agricultural economic growth in developed countries: Evidence from OECD countries. J Int Trade Econ Dev 30: 1004–1019. https://doi.org/10.1080/09638199.2021.1923780 doi: 10.1080/09638199.2021.1923780
|
| [79] |
Seok JH, Kim SE (2023) The impact of population aging on economic growth in Korea: Revisiting the export-led growth hypothesis framework. J Int Trade Econ Dev 33: 1091–1107. https://doi.org/10.1080/09638199.2023.2235434 doi: 10.1080/09638199.2023.2235434
|
| [80] |
Shafiullah M, Selvanathan S, Naranpanawa A (2017) The role of export composition in export-led growth in Australia and its regions. Econ Anal Policy 53: 62–76. https://doi.org/10.1016/j.eap.2016.11.002 doi: 10.1016/j.eap.2016.11.002
|
| [81] |
Shan J, Sun F (1998) On the export-led growth hypothesis: The econometric evidence from China. Appl Econ 30: 1055–1065. https://doi.org/10.1080/000368498325228 doi: 10.1080/000368498325228
|
| [82] |
Shan J, Sun F (1999) Export-led growth and the US economy: Some further testing. Appl Econ Lett 6: 169–172. https://doi.org/10.1080/135048599353564 doi: 10.1080/135048599353564
|
| [83] |
Sojoodi S, Baghbanpour J (2023) The relationship between high-tech industries exports and GDP growth in the selected developing and developed countries. J Knowl Econ 15: 2073–2095. https://doi.org/10.1007/s13132-023-01174-3 doi: 10.1007/s13132-023-01174-3
|
| [84] |
Tang CF, Lai YW, Ozturk I (2015) How stable is the export-led growth hypothesis? Evidence from Asia's Four Little Dragons. Econ Model 44: 229–235. https://doi.org/10.1016/j.econmod.2014.09.022 doi: 10.1016/j.econmod.2014.09.022
|
| [85] |
Thirlwall AP (1979) The balance of payments constraint as an explanation of international growth rate differences. Banca Nazionale del Lavoro Quarterly Review 32: 45–53. https://doi.org/10.13133/2037-3643/12804 doi: 10.13133/2037-3643/12804
|
| [86] |
Toda HY, Yamamoto T (1995) Statistical inference in vector autoregressions with possibly integrated process. J Econom 66: 225–250. https://doi.org/10.1016/0304-4076(94)01616-8 doi: 10.1016/0304-4076(94)01616-8
|
| [87] | Torres R (2019) Export-led growth in the euro area: Benefits and costs. Funcas SEFO 8: 5–14. |
| [88] | WDI (2023) World Development Indicators. The World Bank. Available from: https://datacatalog.worldbank.org/search/dataset/0037712/World-Development-Indicators. |
| [89] |
Westerlund J (2005) New simple tests for panel cointegration. Econom Rev 24: 297–316. https://doi.org/10.1080/07474930500243019 doi: 10.1080/07474930500243019
|
| [90] |
Xu Z (1996) On the causality between export growth and GDP growth: An empirical reinvestigation. Rev Int Econ 4: 172–184. https://doi.org/10.1111/j.1467-9396.1996.tb00094.x doi: 10.1111/j.1467-9396.1996.tb00094.x
|
 NAR-07-02-010-S001.pdf |
 |
Figures(1) / Tables(6)
Jorge V. Pérez-Rodríguez, Heiko Rachinger, Maria Santana-Gallego. Revisiting the export-led growth hypothesis for OECD countries. A fractionally integrated heterogeneous panel data framework[J]. National Accounting Review, 2025, 7(2): 221-248. doi: 10.3934/NAR.2025010
DownLoad: