How stable is the export-led growth hypothesis? Evidence from Asia's Four Little Dragons

This study re-investigates the export-led growth hypothesis for Asia's Four Little Dragons using cointegration and rolling causality analyses. Employing both bivariate (exports and GDP) and trivariate (exports, GDP and exchange rate) models, the study finds that exports and GDP are cointegrated for all the four economies, implying that there is a long run relationship between the variables. However, the rolling regression-based MWALD test shows that export-led growth in each of the four economies is not stable over their respective period of analysis. Instead of export, policymakers should start to search for alternative catalyst of growth to continuously as well as effectively promote long-term economic growth in the Four Little Dragon economies.