Exports and productivity in a small open economy: a causal analysis of aggregate Norwegian data

The direct link from growth in export to growth in productivity-the export-led growth hypothesis-is analyzed using aggregated Norwegian quarterly time series data from 1968 to 1992. By applying techniques of multivariate cointegration, a statistical congruent vector autoregression (VAR) model serves as a general point of departure for structural testing and identification of causal links. The results show that labor productivity can be regarded as "super exogenous" with respect to the parameters in a simulaneous system of export price and export volume. We can thus not reject the hypothesis of "productivity-led" growth, as predicted by e.g. the Ricardian model of international trade or some of the models within the "new" trade theory. (C) 2004 Society for Policy Modeling. Published by Elsevier Inc. All rights reserved.