Does the Export-led Growth Hypothesis Hold for Myanmar?

Abstract

This article examines the causality between export expansion and economic growth in Myanmar using annual time series data for the period from 1981 to 2015. We use the Johansen cointegration test and the Toda-Yamamoto Granger causality test to examine the export-led growth hypothesis in Myanmar. The results show that there is a uni-directional causality running from export expansion to economic growth in Myanmar. Our results support the export-led growth hypothesis in Myanmar. This finding is very important because it indicates that exports are an important factor to promote economic growth. Economic growth can be generated not only by increasing the amounts of labour and capital within the country but also by expanding exports. Exports can perform as an ‘engine of growth’ in Myanmar as in the case of East Asian economies. Therefore, the Myanmar government should actively promote an export expansion strategy to stimulate economic growth by improving trade liberalization and trade facilitation while reducing tariffs and eliminating non-tariff barriers.

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