The Effect of Export Composition on Economic Growth: The Case of Korea

This article investigates the causal relationship between export composition and economic growth, among others, in the case of a strongly outward-oriented country, i.e. Korea. The cointegration tests show that cointegrating vectors exist among the concerned variables. Also, the error correction model indicates that there is a bidirectional causality between export composition and economic growth. That is, the increasing ratio of non-textile exports to textile exports has led to higher economic growth and vice versa. The empirical results remain qualitatively the same even when we include a measure of trade liberalization as one of the explanatory variables that may affect economic growth.