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OUTPUT GROWTH AND VARIABILITY OF EXPORT AND IMPORT GROWTH: INTERNATIONAL EVIDENCE FROM GRANGER CAUSALITY TESTS
Author(s) -
AFXENTIOU Panos,
SERLETIS Apostolos
Publication year - 2000
Publication title -
the developing economies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.305
H-Index - 30
eISSN - 1746-1049
pISSN - 0012-1533
DOI - 10.1111/j.1746-1049.2000.tb00874.x
Subject(s) - openness to experience , causality (physics) , economics , developing country , citation , granger causality , international trade , international economics , political science , psychology , econometrics , economic growth , law , physics , quantum mechanics , social psychology
Economic development was from the very beginning the focus of classical politicaleconomy and presently retains its original human welfare mission andintellectual attraction through insightful anthropological, sociological, andhistorical investigations.1 Within the context of complex and constantly evolvingsociospheres, the objective of a sustained better life for the masses is enhanced,according to Nobel Prize winner Amartya K. Sen (1983, 1988), by functioningsand entitlements which cannot be implemented without a public commitment and adeep government involvement.Notwithstanding the inevitability of semantical differences, the real challenge ofdevelopment does not lie in eliminating definitional disputes pertaining to the objectiveof development but in illuminating those pertinent instrumental relationswhich are relevant in each social milieu, and which, when properly activated, generatean internal development dynamic. Such a dynamic would exhibit characteristicsof uniformity in countries with high degrees of similarity in human and naturalresources, in institutions and in individual preferences. If advanced industrial countriesconverge toward similar patterns, the same cannot be observed in developingcountries whose differences are more pronounced than their similarities. The taskof establishing meaningful patterns of uniformity in the highly differentiated developingworld is not easy, but if accomplished, it would guarantee substantial benefitsin the formulation of effective strategies and policies.An area in which the search for such patterns goes on unabated is that of internationaltrade and openness. Forces of dependence, autarky, balance of payments,international competition, vulnerability to external shocks affect the objective ofdeveloping countries to achieve some degree of balanced growth,2 and most certainlyinfluence their patterns of trade. Although these forces are important, theyare beyond the scope of this paper, which focuses on the investigation of possibletrade patterns and their impact on growth.In the course of this investigation the paper is organized as follows. In the nextsection the role of openness is examined along with citations of empirical studiesthat analyze the impact of export growth and export growth volatility on the growthof GNP. In the third section the rationale of Granger causality, which constitutes thecore of the paper, is presented, followed by short sections on unit root tests, cointegrationtests, and volatility tests that are accompanied by a brief analysis of the respectivestatistical results. In the final section the conclusions of the paper are summarized.