Heterogeneous Panel Causality between Exports and Growth in COMESA Countries

Abstract

This study examines the causal links between exports and economic growth in COMESA countries so as to assess Export-led Growth and Growth-driven Export hypotheses. The study applies Granger causality tests in heterogeneous panels recently developed by Dumitrescu and Hurlin (2012). The results suggest that Export-led Growth hypothesis is only evident in 2 out of 17 COMESA countries and likewise Growth-driven Export hypothesis is also evident in 2 out of 17 COMESA countries. The findings confirm the view that export-led growth hypothesis is not necessarily supported in developing countries whose exports are mainly primary commodities. The study recommends export diversification for COMESA countries if they are to take advantage of their participation in international trade and reap the growth gains from exports.

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