IS EXPORT-LED INDUSTRIAL DEVELOPMENT A VIABLE POLICY? SOME EMPIRICAL EVIDENCE

This paper re-examines the time-series evidence on the relationship between exports and industrial development for eight newly-industrialized economies in light of recent breakthroughs in time-series analysis. Specifically, the investigation employs the time-series procedure of Toda and Yamamoto (1995) where many shortcomings of the traditional approaches (e.g., the Vector-Error-Correction approach) are overcome. The investigation reveals that for all but one of the economies where a policy of export-led growth was explicitly adopted, there is evidence indicating that current increases in exports produce future increases in industrial output. Such evidence is not found for the economies where the policy was not explicitly adopted. This suggests that for a country without an explicit strategy of export-expansion, it appears unlikely that export-expansion will spontaneously stimulate industrial development.