Trade and Growth : New Empirical Evidence from Hong Kong
This study employs the bounds test for the level relationship and conditional Granger causality tests to test the trade-led growth hypothesis for Hong Kong. Results confirm the existence of long term relationship between real income and international trade volume in this country. International trade volume as proxied by exports of goods and services plus imports of goods and services has inelastic but statistically significant coefficient for real income both in the long and short terms. Results reveal that real income of Hong Kong converges to its long term level by 16.1% every year. A final finding of the present study is that conditional Granger causality tests suggest undirectional causation that runs from international trade volume to real income; thus, the trade-led growth hypothesis is confirmed in the case of Hong Kong according to the results of the present study.(original abstract)
- Bahmani-Oskooee, M. J., Alse, Export growth and economic growth: An application of cointegration and error correction modeling, "The Journal of Developing Areas, pp. 535- 42, July 1993.
- Balaguer, J., M., Cantavella-Jorda, Tourism as a long-run economic growth factor: The Spanish case, "Applied Economics", 34, 877-84, 2002.
- Chow, P. C. Y., Causality between export growth and industrial development: Empirical evidence from the NICs, "Journal of Development Economics", pp. 55-63, February 1987.
- Deme, M., An examination of the trade-led growth hypothesis in Nigeria: A co-integration, causality, and impulse response analysis, "The Journal of Developing Areas", 36, (1), pp. 1-15, 2002.
- Dickey, D., Fuller, W. A., Likelihood ratio statistics for autoregressive time series with a unit root, "Econometrica", 49, pp. 1057-72, 1981.
- Granger, C. W. J., Investigating causal relations by econometric models and cross-spectral methods, "Econometrica", 36, pp. 424-38, 1969.
- Gunduz, L., Hatemi-J, A., Is the tourism-led growth hypothesis valid for Turkey?, "Applied Economics Letters", 12, pp. 499-504, 2005.
- Jin, C. J., Export-led growth and the four little dragons, "The Journal of International Trade and Economic Development", 4, pp. 203-15, 1995.
- Katircioglu, S., Trade and growth in a non-recognized small island state: Evidence from the Turkish Republic of Northern Cyprus, "Journal of Business Economics and Management", 11 (1), pp. 112-130, 2010.
- Katircioglu, S., Revisiting the tourism-led growth hypothesis for Turkey using the bounds test and Johansen approach for cointegration, "Tourism Management", 30, 1, pp. 17-20, 2009a.
- Katircioglu, S., Trade, Tourism and Growth: The case of Cyprus, "Applied Economics", 41, 21, 2741-50, 2009b.
- Katircioglu, S., Testing the tourism-led growth hypothesis: The case of Malta, "Acta Oeconomica", 59, 3, 331-43, 2009c.
- Marin, D., Is export-led hypothesis valid for industrialized countries?, "Review of Economics and Statistics", 74, 678-88, 1992.
- Mehmet, O., Tahiroglu, M., Growth and equity in microstates: Does size matter in development?, "International Journal of Social Economics", 29, 152-62, 2002.
- Narayan, P. K., The saving and investment nexus for China: Evidence from cointegration tests, "Applied Economics", 37, 17, 1979-90, 2005.
- Narayan, P. K., Smyth, R., The relationship between the real exchange rate and balance of payments: Empirical evidence for China from co-integration and causality testing, "Applied Economic Letters", 11, 287-91, 2004.
- Omotor, D. G., The role of exports in the economic growth of Nigeria: The bounds test analysis, "International Journal of Economic Perspectives", 2, 4, 222-35, 2008.
- Pacific Exchange Rate Service, http://fx.sauder.ubc.ca, reached at October 12, 2008.
- Pesaran, M. H., Shin, Y., Smith, R. J., Bounds testing approaches to the analysis of level relationships, "Journal of Applied Econometrics", 16, 289-326, 2001.
- Phillips, P. C. B., Perron, P., Testing for a unit root in time series regression, "Biometrica", 75, 335-46, 1988.
- Proudman, J., Redding, S., Bianchi, M., Openness and growth, "Proceedings of the Bank of England Academic Conference on the Relationship between Openness and Growth in the United Kingdom", September 15th, 1997, Bank of England, Martins Printing Group, U.K., 1998.
- Rao, B. B., Singh, R., Effects of trade openness on the steady-state growth rates of selected Asian countries with an extended exogenous growth model, "Applied Economics", forthcoming (DOI: 10.1080/00036840802534468), 2009.
- Shan, J., Sun, F., Export-led growth hypothesis for Australia: an empirical re-investigation, "Applied Economics Letters", 5, 423-28, 1998.
- Sims, C. A., Money, income, and causality, "American Economic Review", 62, 540-52, 1972.
- World Bank, World Development Indicators, CD-ROM database, 2010.
- Xu, X., On the causality between export growth and GDP growth: An empirical reinvestigation, "Review of International Economics", 4, 172-84, 1996.