Manufactured exports and economic growth in Indonesia :: A Granger causality analysis

MAULANA, Agus, Dr. Yoichi Okita

2009 | Tesis | S2 Magister Ekonomika Pembangunan

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This paper investigates the possibility of the export-led growth (ELG) and the growth-driven export hypotheses in Indonesia by testing for Granger causality between logarithms of real manufactured exports and real non oil GDP. Using quarterly data, two different periods were examined, namely the pre-crisis period (1983Q1-1996Q4) and the post-crisis period (1999Q1-2008Q4). This paper employs two complementary econometric approaches to Granger causality tests. First, a pairwise Granger causality test was applied within finite-order of vector auto regressive (VAR) models in levels and/or in first differences. Then, with no need for pre-testing, a modified Wald (MWald) test was used in augmented level VAR systems, as proposed by Toda and Yamamoto (1995). The results showed that for the pre-crisis period, there was a unidirectional causality from economic growth to exports. Conversely, for the post-crisis period, the ELG hypothesis was found to be valid for Indonesia. The aggregate analysis of the composition of manufactured exports indicates that the technology embodied in exported goods seems to be an important factor to support economic growth.

Kata Kunci : Manufactured exports,Economic growth,Granger causality,Vector auto regression (VAR), Manufactured exports, economic growth, Granger causality, vector auto regression (VAR), export composition, technology, Indonesia