Previous studies on economic growth have shown that countries that relied on exports to propel their economies have been successful in achieving robust economic growth. This study considers Botswana’s mineral exports production from 2003 Q1 to 2012 Q4 and relates each export commodity with the GDP. This study applies the Johansen co-integration test and the Granger causality test to determine the applicability of the export-led growth hypothesis for the Botswana economy. The co-integration test shows that there is long run co-movement between GDP and four of Botswana’s mineral exports namely: matte; diamonds; copper; nickel and soda ash. In addition, the Granger causality test shows that Botswana’s economy propels exports production. From these results, the study nullifies the export-led growth hypothesis and postulates that the Botswana economy rather follows the growth-driven exports hypothesis (GDE). The study further postulates recommendations and also potential areas of research.
Table of Contents
1. Abstract
2. Introduction
3. Literature Review
4. Research Hypotheses
5. Data Description
6. Methodology
6.1 Cointegration Analysis
6.2 Causality Analysis
7. Hypotheses Test Results
7.1 Trace Test Results
7.2 Maximum Eigenvalue Test Results
7.3 Causality Test Results
8. Discussion
9. Conclusion
10. References
Research Objectives & Core Themes
This study aims to empirically test the applicability of the export-led growth hypothesis for the Botswana economy by analyzing the relationship between mineral production quantities and GDP from 2003Q1 to 2012Q4.
- Evaluation of the export-led growth versus the growth-driven exports hypothesis.
- Analysis of cointegration between GDP and specific mineral exports (diamonds, copper, nickel, etc.).
- Investigation of Granger causality directions between economic output and mineral export production.
- Assessment of Botswana's vulnerability to the "natural resource curse."
- Contribution to literature by focusing on physical production quantities rather than sales revenue.
Excerpt from the Book
Introduction
According to Tang et al. (2015), for decades economies that relied on exports to drive their economies have achieved considerable success in accelerating their economic growth. Thus in Asia, several countries have deployed this idea to achieve impressive economic growth since the 1960’s. Such economies include South Korea, Taiwan, Hong Kong, Malaysia, Thailand and notably China and India. The success of these exports oriented Asian economies has thus made a breakthrough in empirical research that investigated the function of exports on economic growth (Tang et al., 2015). Studies on economic growth generally propose 2 hypotheses to explain economic growth. The extant literature postulates the export-led growth hypothesis, in which exports propel economic growth. The World Bank (1987) study showed that exports–promotion strategy may flourish economies of the Less Developing Countries (LDC’s) in their attempt to industrialize and transform into robust economies. Nonetheless, the relationship between exports and economic growth can reverse hence affirming the growth-driven exports hypothesis (GDE). Following Konya (2006), the GDE hypothesis is focused on the fundamental that economic growth itself induces trade flows. Thus according to Konya (2006), this can create comparative advantage in some sectors of the economy which will later propel specialization and facilitation of exports production.
Summary of Chapters
Abstract: Provides a concise overview of the research findings, noting that the study nullifies the export-led growth hypothesis for Botswana and instead suggests a growth-driven exports model.
Introduction: Outlines the theoretical background regarding export-led growth and growth-driven exports, establishing the paper's focus on Botswana's mineral production quantities.
Literature Review: Examines existing academic discourse on the relationship between exports, GDP, exchange rates, energy consumption, and the natural resource curse.
Research Hypotheses: Formulates two central hypotheses regarding the positive trend of mineral production with GDP and the causal influence of export quantities on economic growth.
Data Description: Details the dataset covering 2003Q1–2012Q4, including descriptive statistics for various mineral outputs and GDP.
Methodology: Defines the mathematical models and statistical tests used, specifically the Johansen cointegration test and Granger causality framework.
Hypotheses Test Results: Presents the empirical outcomes from the trace test, maximum eigenvalue test, and causality analysis regarding the defined variables.
Discussion: Interprets the statistical results in the context of Botswana's economic structure, comparing them with findings from other developing and emerging economies.
Conclusion: Summarizes the study's conclusions, confirms that Botswana follows the growth-driven exports hypothesis, and suggests directions for future research.
Keywords
export-led growth, growth-driven exports, mineral exports, Botswana economy, GDP, Johansen cointegration, Granger causality, natural resource curse, macroeconomic analysis, economic development, trade flows, production quantities, commodity exports.
Frequently Asked Questions
What is the primary focus of this research?
The research investigates the relationship between Botswana's mineral export production quantities and its economic growth (GDP) to test the applicability of the export-led growth hypothesis.
What are the central themes discussed in the paper?
Key themes include export-led growth theories, the growth-driven exports hypothesis, the dynamics of mineral-dependent economies, and the structural implications of the "natural resource curse."
What is the core research question or objective?
The primary objective is to determine if mineral exports drive Botswana's GDP or if the country's economic growth induces the production of exports, testing two specific hypotheses regarding these relationships.
Which scientific methods are employed?
The study utilizes the Johansen cointegration test to examine long-run relationships and the Granger causality test to determine the direction of influence between GDP and mineral production.
What does the main body cover?
The main body covers a comprehensive literature review, detailed data descriptions, the mathematical methodology (including error correction models), and the empirical results from cointegration and causality testing.
Which keywords characterize this work?
The work is characterized by terms such as export-led growth, growth-driven exports, Botswana, cointegration, Granger causality, and mineral exports.
Does the study confirm that exports drive Botswana's economy?
No, the study finds that Botswana follows the "growth-driven exports" hypothesis, meaning economic growth induces trade flows, rather than the reverse.
What specific minerals are analyzed in the research?
The study analyzes data for coal, cobalt, copper, matte, nickel, soda ash, gold, and diamonds.
- Arbeit zitieren
- Mpho Bosupeng (Autor:in), 2015, The Export-Led Growth Hypothesis. New Evidence and Implications, München, GRIN Verlag, https://www.hausarbeiten.de/document/299464
