In contrast to cross-country studies, the paper investigates the relationships between trade and labour productivity for nine rapidly developing Asian countries in a time-series framework using a vector error-correction model. Independent tests on the long-run and short-run relationship between trade variables of exports and imports and productivity are conducted. The results suggest that trade has an important impact on productivity and output growth in the economy, however it is imports that provide the important 'virtuous' link between trade and output growth. The results indicate that exports and imports have qualitatively different impacts on labour productivity. The long-run result shows that there is no causal effect from exports to labour productivity growth for Hong Kong, Indonesia, Japan, Taiwan and Thailand; thereby suggesting that there is no export-led productivity growth in these countries. However, significant causal effects were found from imports to productivity growth, suggesting import-led productivity growth in India, Indonesia, Malaysia, Philippines, Singapore and Taiwan. In addition, the results indicate that imports tend to have greater positive impact on productivity growth in the long run.
|Number of pages||11|
|Publication status||Published - 10 Jun 2004|
|Event||35th Annual Meeting of the Canadian Economic Association: presented by Shandre M. Thangavelu - McGill University, Montréal, Québec, Montréal, Canada|
Duration: 31 May 2001 → 3 Jun 2001
Conference number: 35th
https://economics.ca/2001/ (CEA 2001 Home Page)