Exports, Growth and Causality in the SEACEN Countries

This paper examines the causal relationship between exports and economic growth (and vice versa) for the SEACEN Countries. Empirical tests were performed with and without component effects of exports to economic growth to see which variable influences another. Unit root test and cointegration test were conducted to test the stationarity of the time series to be used, and the Granger Causality Test was performed using Akaike's and Schwarz's optimal lag criteria. It is argued that this paper goes beyond the shortcomings of the previous studies which ignore the stationarity of time series data as well as the optimal lag length in Granger's Causality Test. More importantly, this paper also attempts to distinguish the direct and indirect effects between exports and economic growth. The results suggest little support for the export-promotion hypotheses.