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Export, Import, Productivity and Growth: A theoretical and empirical study of an endogenous relationship

Ifwarsson, Ricky LU (2010) NEKM01 20102
Department of Economics
Abstract
Numerous studies in the international economic literature suggest that foreign trade has a large positive effect on growth. From the theoretical aspects there are several reasons to be¬lieve in both export- and import-led productivity growth as well as productivity-led exports. The empirical results have been mixed, with earlier studies indicating a strong relationship and more recent studies that question the exogeneity assumption, finding endogenous results in several directions. In this study I develop a theoretical model, based on Aghion and Howitt’s (1990) Schumpeterian framework, which explain important parts of the diverging results by showing that trade can affect the incentives and probabilities for innovations. I also investigate... (More)
Numerous studies in the international economic literature suggest that foreign trade has a large positive effect on growth. From the theoretical aspects there are several reasons to be¬lieve in both export- and import-led productivity growth as well as productivity-led exports. The empirical results have been mixed, with earlier studies indicating a strong relationship and more recent studies that question the exogeneity assumption, finding endogenous results in several directions. In this study I develop a theoretical model, based on Aghion and Howitt’s (1990) Schumpeterian framework, which explain important parts of the diverging results by showing that trade can affect the incentives and probabilities for innovations. I also investigate the relevance of the relationship between aggregated exports, imports and TFP in a Johansen approach for cointegration with error correction models and short-run Granger cau-sality tests, for five OECD countries. I conclude that there is some weak support of long-run relations in all except two cases, and that the strong support for trade induced productivity en-hancements cannot be found. The results are generally varying between countries and do not get more conclusive when studying the short-run effects. The heterogeneous results from this study therefore tend to question the previous assumption that trade, and especially export, positively affects productivity growth. (Less)
Please use this url to cite or link to this publication:
author
Ifwarsson, Ricky LU
supervisor
organization
course
NEKM01 20102
year
type
H1 - Master's Degree (One Year)
subject
keywords
Export, Import, Productivity, Growth, Cointegration, Johansen approach, ECM, OECD
language
English
id
1668970
date added to LUP
2010-09-28 08:33:10
date last changed
2010-09-28 08:33:10
@misc{1668970,
  abstract     = {{Numerous studies in the international economic literature suggest that foreign trade has a large positive effect on growth. From the theoretical aspects there are several reasons to be¬lieve in both export- and import-led productivity growth as well as productivity-led exports. The empirical results have been mixed, with earlier studies indicating a strong relationship and more recent studies that question the exogeneity assumption, finding endogenous results in several directions. In this study I develop a theoretical model, based on Aghion and Howitt’s (1990) Schumpeterian framework, which explain important parts of the diverging results by showing that trade can affect the incentives and probabilities for innovations. I also investigate the relevance of the relationship between aggregated exports, imports and TFP in a Johansen approach for cointegration with error correction models and short-run Granger cau-sality tests, for five OECD countries. I conclude that there is some weak support of long-run relations in all except two cases, and that the strong support for trade induced productivity en-hancements cannot be found. The results are generally varying between countries and do not get more conclusive when studying the short-run effects. The heterogeneous results from this study therefore tend to question the previous assumption that trade, and especially export, positively affects productivity growth.}},
  author       = {{Ifwarsson, Ricky}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Export, Import, Productivity and Growth: A theoretical and empirical study of an endogenous relationship}},
  year         = {{2010}},
}