Empirical Investigation of Exports and Economic Growth: Evidence from Sane Countries, 1980-2016

Abstract

This study employed the Autoregressive Distributed Lag (ARDL) Bounds test technique to cointegration to investigate the relationship between exports and economic growth in SANE countries (South Africa, Algeria, Nigeria and Egypt) from 1980 to 2016. The results of the long-run relationship revealed that exports had a positive and insignificant relationship with economic growth in South Africa and Egypt. Nevertheless, exports had a positive and significant relationship with economic growth in Algeria and Nigeria. Furthermore, the causality results showed that while a uni-directional causality from exports to real GDP per capita growth rate exists for Nigeria and Egypt, a one-way causality runs from real GDP per capita growth rate to exports for South Africa. This indicates that an export-led growth (ELG) hypothesis is valid for Nigeria and Egypt. However, evidence of a growth-led export (GLE) hypothesis was found for South Africa. Nevertheless, no evidence of either an ELG hypothesis or GLE hypothesis was found for Algeria. The study, therefore, recommends that the Nigerian and Egyptian governments should continue with export-led development strategies, in order to sustain the export-led growth strategy, there is need for diversification of exports in South Africa and Algeria, the South African government should continue with growth-led development strategies, in order to sustain the growth-led export strategy, and the spate of political instabilities should be discouraged through democratic ideals with a view to attracting foreign investors in the export sector.