Open AccessAn Empirical Test of the Export-Led Model in the Member Countries of the Andean Community (Comunidad Andina de Naciones – CAN)
Author(s) -
Alexander Carvajal,
Oscar David Andrés Julián López Camargo
Publication year - 2021
Publication title -
lecturas de economia/lecturas de economía
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.137
H-Index - 6
eISSN - 2323-0622
pISSN - 0120-2596
DOI - 10.17533/udea.le.n94a343336
Subject(s) - endogeneity , cointegration , economics , granger causality , gross domestic product , international economics , macroeconomics , economy , econometrics
This paper seeks to empirically test the applicability of the export-led model to the economies of the countries belonging to the Andean Community (Comunidad Andina de Naciones – CAN) by verifying the export-led growth (ELG) hypothesis, which indicates that gross domestic product (GDP) behavior is based on export (EXP) dynamics. This hypothesis was tested for Bolivia, Colombia, Ecuador, and Peru. The methodology used was the application of Johansen cointegration and Block Exogeneity Wald tests to identify Granger causality between variables of the natural logarithms of EXP and GDP. The results obtained show that the causal effect of exports on GDP can only be rejected for the Bolivian economy. Lastly, the main conclusion of this study is that the economic policies of the CAN member countries should not assume that the export sectors are the foundations of their respective economies. Therefore, the CAN governments should not introduce economic policies that prioritize the expansion of the export sector.