A number of empirical studies have concluded that exports promote economic growth. In each case, a single equation model was estimated by OLS with the magnitude of the export growth coefficient being consistently small, albeit significant. The present study of extensive cross-country data indicates the likelihood of simultaneous determination of exports and economic growth. The rate of growth of exports is then treated as an endogenous variable with the equation estimated by 2SLS in a number of cases in which various plausible combinations are assumed for the system. The 2SLS results generally amplify the earlier findings but tend to show that exports probably play a more important role than was previously indicated. [019, F43]
The purpose of this study is to specify and estimate a simultaneous equations model of regioal income differentials within SEA data. As far as can be determined, no research on income differentials has used a simultaneous equations mode or SEA data. In addition to estimates of the structural model, reduced form equations are derived to find the direct and indirect effects of the various exogenous variables on each endogenous variable.
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