Resumen de Revisiting export-led growth hypothesis: an empirical study on South Asia

Neena Malhotra, Deepika Kumari

• This study reinvestigates the export-led growth hypothesis for the four largest economies of South Asian sub region namely India, Pakistan, Bangladesh, and Sri Lanka under multivariate time-series framework. The study utilizes annual data for the period 1980 to 2012. Most of the previous studies are based on either bivariate or trivariate framework. Hence, to remove misspecification bias, present study includes imports, gross capital formation and labour as additional variables apart from exports and gross domestic product (GDP) per capita. The study applied statistical techniques such as Augmented Dickey-Fuller (ADF) and Phillips-Perron (PP) unit root tests, Johansen cointegration test and Vector Error Correction Model (VECM). Forecasting techniques namely Impulse Response Function (IRF) and Variance Decomposition Analysis (VDA) were used to investigate the interrelationship within the system. Diagnostic tests for normality, heteroskedasticity, autocorrelation were conducted using Jarque-Bera Normality test, ARCH Heteroskedasticity test and Breusch-Godfrey LM test. The results of short-run causality based on VECM including the directions thence varied country to country