Long run economic growth

One of the enduring questions in economics is how nations can accelerate their economic development, with a common answer being the promotion of exports. This approach is believed to influence development by encouraging the production of goods for export or by allowing the accumulation of foreign exchange, which facilitates the importation of high-quality goods and services necessary for expanding production capabilities. This concept is often referred to as export-led growth, with the "two-gap" hypothesis highlighting the importance of foreign exchange in this process. Early studies on this topic primarily involved static cross-country comparisons, which suggested a strong correlation between export growth and income growth. However, Kravis raised a pivotal question in 1970 regarding whether exports serve as a catalyst or merely accompany economic growth. To explore this dynamic relationship, researchers have utilized time series analyses to determine if exports drive income growth. Several studies have employed Granger causality tests to assess whether individual countries demonstrate statistically significant evidence of export-led growth, contributing to the ongoing debate about the true role of exports in economic development.