Economic Growth
Ali Mahdiloo; Hosein Asgharpour; Mohammad Mehdi Barghi Oskooei
Volume 7, Issue 28 , September 2017, , Pages 17-32
Abstract
There are two major views on the subject of the relationship between the development of non-oil exports and economic growth. In first opinion, non-oil exports leads to economic growth through the increase in quality of inputs. In second opinion, economic growth will increase non-oil exports throughquantitative ...
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There are two major views on the subject of the relationship between the development of non-oil exports and economic growth. In first opinion, non-oil exports leads to economic growth through the increase in quality of inputs. In second opinion, economic growth will increase non-oil exports throughquantitative strengthening of inputs. In non-linear models there are the ability to calculate relationship between variables and causal variables in different regimes. For this reason non-linear causality models can have better results than linear causality models. For this purpose in this study a Markov Switching model is used to investigate non-linear causal relationship between economic growth and non-oil export in the years 1973-2013. The results indicate that in first regime (high growth) and second regime (low economic growth), there is no causality between exports and economic growth. The reason is lack of sufficient attention to production of other economic sectors during the oil boom. As a result, it causes the weakening of production, reduction of domestic production and international competitive power and finally reduction of the share of exports of goods and services in economic growth.
