Trade-led growth hypothesis: evidence from Latin America countries

In this paper, we investigate the relationships between trade and labor productivity for nine Latin American countries in terms of the trade-led growth hypothesis. We use a vector error-correction model and perform independent tests of the short-run and long-run relationship among exports, imports a...

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Bibliographic Details
Published in:Empirical economics 2023-02, Vol.64 (2), p.727-745
Main Authors: de Souza Nonato, Vinícius Luís, Carrasco-Gutierrez, Carlos Enrique
Format: Article
Language:English
Subjects:
Causality
Cointegration analysis
Econometrics
Economic growth
Economic theory
Economic Theory/Quantitative Economics/Mathematical Methods
Economics
Economics and Finance
Emerging markets
Exports
Finance
Hypotheses
Imports
Insurance
International trade
Labor productivity
Literature reviews
Management
Statistics for Business
Stochastic models
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Summary:In this paper, we investigate the relationships between trade and labor productivity for nine Latin American countries in terms of the trade-led growth hypothesis. We use a vector error-correction model and perform independent tests of the short-run and long-run relationship among exports, imports and productivity to examine the direction of causality. The results show that exports and imports have impacts on labor productivity. We find evidence that the export‐led growth hypothesis is significant for Bolivia, Chile and Mexico; the growth‐led export hypothesis is significant for Uruguay; the import‐led growth hypothesis is relevant for Brazil, Colombia and Mexico; and the growth‐led import hypothesis is relevant for Brazil, Colombia and Uruguay. Finally, we note an important role of imports in the long-run development of these economies.
ISSN:0377-7332
1435-8921
DOI:10.1007/s00181-022-02266-w