The relationship between export performance and global economic performance

Abstract

As trade between nations has progressed, some countries have focussed their economic policies on increasing exports. In many cases, these exports have been the most significant driver behind the economic success of these nations and the resultant improvement in the welfare of their citizens. This research is needed in order to understand the extent that a country is dependent on the economic output of its trading partners to drive its export performance. This is of particular interest in the context of the current economic issues being experienced in some of the major markets of the world. The research evaluates the statistical relationship between world GDP and export performance, adjusting for different time periods and different industries. A Granger causality test was also applied in an effort to avoid the shortfalls of simple longitudinal regression tests. The sample included data from 1948 to 2010, across 11 industries in 20 countries.The research found a strong relationship between world GDP and export performance, although the results of the Granger test show that this is not a causal relationship. The diversity and complexity of a country’s industrial structure emerged as a significant theme in the research and was integrated into a model (Figure 5) that can be used by policy makers to assess their own export position according to these variables. The results of this research can assist policy makers in understanding the vulnerabilities of their export performance to global economic cycles as well as in prioritising and evaluating industrial sector development. The research highlights how, in spite of the challenges that may be experienced with regards to global economic performance, there is still a great deal of scope for policy makers to influence their own futures when it comes to export performance.