Causality Relationships between Total Exports with Agricultural and Manufacturing GDP in Sudan (1980 -2006)

Abstract

or many years both policy makers and academicians have shown greater interest in exploring the possible relationship between international trade and economic growth. The reason is clear. Nations are concerned about the quality of life of their citizens which mainly comes from macroeconomic prosperity. Increasing GDP is the major target of any economy. There are many different approaches to achieve this goal; one possibility is to promote export. But this however raises questions, should a country promote export to speed up economic growth or should it primarily focus on economic growth to generate international trade? Along with this debate, economists came up with different views concerning the role of export on growth. In many studies, the export-led growth and growth driven export hypotheses have become a debate for researchers and policy makers alike for almost three decades. The export-led growth hypothesis generally reflects the relationship between exports and economic growth; in particular, that output growth is driven by exports. This relationship, however, remains the subject of debate. Several studies have established a positive relationship between export expansion and economic growth. Some studies provided empirical results to support this hypothesis of positive relationship, such studies include Balasa (1978) Feder (1982). In addition Arnade and Vasavada 1995; Fosu 1996; Thornton 1996; Perry Sadorsky 1996 in Canada found that exports leads to economic growth, while others have found contrasting evidence that export is caused by the economic growth (Al-Yousif 1999, Henriques and Sadorsky (1996) Harnhirun (1996), Evidence from the Asian countries, while yet others demonstrated that there exists a bi-directional relationship between these variables such that export cause economic growth and economic growth cause export (Dutt and Ghosh 1994; Thornton 1997; Shan and Sun 1998;) Khalafalla and Webb;