An empirical examination of the export-led growth hypothesis in Fiji

Type Working Paper - Economics Department Reserve Bank of Fiji
Title An empirical examination of the export-led growth hypothesis in Fiji
Author(s)
Publication (Day/Month/Year) 2003
URL http://www.rbf.gov.fj/docs/wp2003-01.pdf
Abstract
This paper examines the nature, as well as the strength of the causal relationship between real exports growth and real GDP growth for Fiji. Granger causality tests, under a VAR framework, were used to examine whether growth in real exports causes real GDP growth or vice versa. Moreover, in an effort to gauge the strength of the causality, the paper tested the influence of a third variable by using Block Exogeinity tests. Other measures, f-tests and variance decomposition tests, were also used to assess the strength of this relationship on an in-sample basis. Overall, the results showed that growth in real exports does cause real GDP growth. Moreover, it was found that the trade-weighted trading partner GDP (lagged one year) and real imports, from the late 1980s, have played an important role in enforcing the relationship between real exports growth and real GDP growth. In broad terms, therefore, the results of this study are supportive of the export oriented, outward-looking approach to trade relations adopted by policymakers over the past decade.

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