Brazil - China economic growth

an analysis of the validity of the Export –led-growth hypothesis from 1960 to 2018

Abstract

With the strengthening of emerging economies, factors such as greater liquidity and growth of commodities in the international market, made the external scenario more favorable. In addition, they served as a trigger for developing countries, such as Brazil and China, to intensify their trade relations. The objective of this work is to verify, for the period from 1960 to 2018, if the Export led Growth hypothesis is valid for Brazil and China. The method assumes that the GDP can be expressed in terms of physical capital, human capital, exports and imports of goods and services. The results of this work show a unidirectional causal relationship between imports and GDP for China and Brazil, that is, the empirical evidence indicated that it is imports that cause GDP and not exports, refuting the validity of the hypothesis that exports have contributed effectively to economic growth in these countries. Another variable that also causes GDP in both countries investigated was gross capital formation. Thus, the results found lead to the conclusion that the relationship between international trade and economic growth has a positive impact on the economy, but suggests that other variables contribute to the increase in gross domestic product in these countries.