Export-led economic growth: application to Canada, USA, and the UK
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Date
2025
Authors
Hasan, Aminul
University of Lethbridge. Faculty of Arts and Science
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Publisher
Lethbridge, Alta. : University of Lethbridge, Dept. of Economics
Abstract
This thesis explores the Export-Led Growth (ELG) hypothesis by analyzing the relationship between exports and economic growth in three advanced economies: Canada, the United States, and the United Kingdom. Utilizing annual time-series data from 1960 to 2016, the study employs unit root tests, Vector Autoregression (VAR) models, and Granger causality tests to determine whether exports drive GDP growth or vice versa. The model also includes labor, capital, terms of trade, and foreign output shocks to account for broader macroeconomic influences. The findings reveal bidirectional causality between exports and GDP in Canada, providing strong support for the ELG hypothesis. In contrast, no significant causal link is found in the United States, indicating that exports do not play a leading role in driving its economic growth. The United Kingdom demonstrates moderate evidence of export-led growth, with exports affecting GDP through specific lag structures. These results emphasize that the ELG hypothesis does not hold uniformly across countries, even among high-income economies. The thesis highlights the importance of considering country-specific factors and recommends that policymakers tailor trade and growth strategies based on domestic economic structures and external conditions.
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Keywords
export-led growth , economic growth , VAR , Granger causality , Canada , USA , UK , trade policy