Abstract:
The relationship between exports and economic growth, as well as the differences between export-led industrialization and import-substitution industrialization strategies in development literature, has received significant attention. Since the 2010s, a consensus among neoclassical economists regarding export-led growth theory has become a new general belief, and consequently, World Bank policies have been formulated based on it. Accordingly, the aim of the present research is to investigate the impact of export instability on Iran's economic growth in the time interval from the first quarter of 2014 to the fourth quarter of 2021. To this end, the export instability index was first estimated using the GARCH model, and then the impact of export instability on Iran's economic growth was examined using the Autoregressive Distributed Lag (ARDL) method. The results obtained from the model estimation indicate that export instability has a significant negative impact on economic growth, while private consumption expenditure, investment, and export variables have a significant positive impact on economic growth. Additionally, results based on the error correction term coefficient indicate that in each period (each quarter), approximately 0.32 of the short-term imbalance is adjusted to reach long-term equilibrium.
Machine summary:
In the present research, considering that the test for the existence of a deterministic trend in the export variable indicated the presence of a deterministic trend in this variable, the variable was first detrended and then the export volatility index was extracted using the Generalized Autoregressive Conditional Heteroskedasticity 9 (GARCH) has been addressed, and to investigate the impact of export volatility on economic growth, the Autoregressive Distributed Lag (ARDL) method has also been used.
The results of the research indicate the existence of a negative and significant relationship between ex- 1-Gebremedhin 2-Bakar & Subramaniam 3-Abraham 4-Gymeh-Bermpon 5-Sule & Marrigan port instability and economic growth, which shows that export instability leads to a reduction in economic growth through the reduction of investment.
In the stationarity test related to the level of the logarithm of export variable 4 and the growth of Gross Domestic Product, the absolute value of the Augmented Dickey-Fuller statistic was greater than the absolute value of the MacKinnon critical value at the 5 percent error level; therefore, the H0 hypothesis based on the existence of a unit root was rejected, and the logarithm of exports and GDP growth variables are stationary at level (I0).
In the stationarity test related to the level of the logarithm of private consumption expenditure and the logarithm of investment variables, the absolute value of the Augmented Dickey-Fuller statistic was less than the absolute value of the MacKinnon critical values at the 5 percent error level; therefore, the H0 hypothesis based on the existence of a unit root was confirmed, and the aforementioned variables are non-stationary at level.
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