Can an increase in exports lead to economic growth?
Tashkent, Uzbekistan (UzDaily.com) -- Experts from the Institute for Forecasting and Macroeconomic Research (IPMI) analyzed the impact of increased exports on economic growth.
The study analyzed the relationship between the volume of exports of the main categories of goods (except oil and natural gas) and the economic growth of the Izmir Treaty countries: Azerbaijan, Iran, Kazakhstan, Kyrgyzstan, Pakistan, Tajikistan, Turkmenistan, Turkey and Uzbekistan.
The Izmir Treaty was signed by the member countries of the Economic Cooperation Organization in order to strengthen deep historical and cultural ties between peoples, improve the level and quality of life, and further expand international trade.
According to the ELG (Export Led Growth) hypothesis, real GDP growth can be achieved not only by increasing human capital and labor productivity, but also by increasing exports due to the multiplier effect. The implementation of export-oriented policies can indirectly stimulate economic growth through the efficient allocation of resources and efficient use of potential (Awokuse, 2003; Pillay, 2011).
It was found that the volume of exports is a significant and positive factor influencing economic growth: an increase in exports by 1% leads to an additional 0.4% of economic growth. This remained true even after removing the effects of domestic investment, economic freedom, labor, and external debt.
The study used panel data from the countries of the Izmir Agreement for 2002-2020, and for their analysis, an autoregressive model (with Price-Winsten correction) and a random effects model were used.