EXPORTS AND ECONOMIC GROWTH-An Empirical Study of Madagascar.pdf

1、The export-led growth hypothesis (ELGH) stated that export expansion is one of the maindrivers of growth.In fact, the relationship between exports and growth is usually due to theplausible positive externalities in terms

2、 of economies of scale for the local economyfollowing from active trade in world markets.
　　The objective of this paper is to investigate the validity of the Export-Led Growth (ELG)hypothesis in case of Madagascar usi

3、ng annual data for the period 1970-2008.Combiningboth production function and international trade, a six variable (real GDP, real exports, realimports, Gross Fixed Capital Formation, labour force and exchange rate) has b

4、eenidentified.This paper used multivariate time series econometric framework to test for thecausal linkage between exports and economic growth.Dynamic econometric models willbe estimated to test for time series propertie

5、s: unit root (ADF test), cointegration(Johansen's procedure), and Granger-causality (Error Correction Model).
　　Johansen test of Cointegration and Granger Causality are employed in order to determineshort run and long

6、 run causality.The result of Cointegration indicates the existence of asingle cointegrating equation.This means that these variables are linked together inachieving their state equilibrium in the long run.Resulting from

7、our Error Correction Model, we found that exports, imports and capital formation cause economic growth in theshort-run at 5％ level of significance.This confirms that export-led growth hypothesis isvalid in the economy of

8、 Madagascar.However, our results indicate that labor force andexchange rate will not cause economic growth in short run causality.Therefore, the resultsfound that there is a dynamic relationship between export activities