The Validity of the ELG Hypothesis in the MENA Region: Cointegration and Error Correction Model Analysis

Abstract

The paper examines the export-led growth (ELG) hypothesis for nine Middle East and North Africa (MENA) countries in three-variable vector autoregressive and error correction models. When considering total exports, our results reject the ELG hypothesis in almost all of these countries. When we examine only manufactured exports, we find no support for ELG in countries with relatively low shares of manufactured exports in total merchandise exports but strong support in countries with relatively high shares. These findings suggest that promoting exports may contribute to economic growth only after a certain threshold of manufactured exports has been reached.ELG; MENA; Middle East and North Africa; economic growth; export promotion; Granger causality; cointegration; error correction model