DP426 The Empirical Modelling of NIE Exports: An Evaluation of Different Approaches

Author(s): Vito Antonio Muscatelli, T G Srinivasan, David Vines
Publication Date: July 1990
Keyword(s): Exports, Terms of Trade, Trade Policy
JEL(s): 112, 132, 133, 422, 431
Programme Areas: International Macroeconomics, International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=426

This paper investigates the current debate regarding the robustness of estimates of export demand and supply elasticities for LDCs and NIEs obtained by recent empirical studies. The empirical findings reported in the paper suggest that price elasticities of demand are indeed low, and that there are strong and significant income effects on export demand. Furthermore, using a variety of modelling approaches, we demonstrate that the choice of estimation method and normalization need not lead to drastically different conclusions regarding the size of the price elasticity of demand for NIE exports. While this points against the "small-country assumption" usually made regarding LDC/NIE exports, we argue that the preferred development strategy for LDCs need not necessarily be an inward-oriented o.