An Empirical Examination of the Export-Led Growth Theory Regarding Georgia

Abstract

This paper aims to justify the validity of the export-led growth hypothesis (ELG) for the transition economy like Georgia. The ELG theory implies the acceleration of an economic growth through the market openness in exchange for market expansion. The concept of the work lies in the following assumptions: Firstly, as a transition country, Georgia should prioritize private sector driven and export-led growth economy and secondly, the European integration process is the unprecedented opportunity for Georgia regarding export market expansion. The paper covers the time from 1990 to 2016; Engle-Granger cointegration and Granger causality tests were employed to trace the validity of the ELG hypothesis. The results confirmed the existence of at least one cointegration vector, as well as the bidirectional causality between economic growth and export, thus landed support on the validity of the ELG hypothesis regarding Georgian economy.