Some evidence on the export-led growth hypothesis for Ireland

Abstract

The objective of this paper is to test, for the export-led growth hypothesis in Ireland over the last 40 years using the modern econometric analysis of nonstationary time series. We find that over the 1950-1990 period there is no long-run relationship between real GDP and export volume and no evidence for the export-led growth hypothesis either. The analysis of the more recent 1981-1994 period provides strong evidence in favour of a long-run relationship between industrial production and export volume and Granger-causality from exports to output. These results support the export-led growth hypothesis over the last fifteen years and highlight the importance of export-promoting policies.