Exports and Economic Growth: A Re-Examination of the Causality Relation in Six Countries, 1981-2005

The paper argues that, in most cases, causality runs from economic growth to export growth. To support this argument, we start by examining the evidence on causality in the empirical studies done on this subject. Then we empirically test the direction of causation between exports and economic growth using Granger’s causality test on time-series data of six countries (Brazil, India, Indonesia, South Korea, Mexico and Thailand). The test reveals that; out of the six cases, the direction of causality can be inferred in two cases; one from growth to exports, the other from exports to growth. Finally we consider the early experiences of the developed countries, and the role of the internal supply factors that determine the supply of output including that of exports.