Export Dependence and Economic Growth: A Reformulation and Respecification

Abstract

It is the general argument of dependency and world-system theory that various forms of external economic dependence will have negative effects on the economic growth of nations. This paper reformulates the logic behind this expectation in the context of the economic growth effects of one widely employed measure of international economic dependence—export dependence. It is argued that this measure of dependence should have a positive linear effect on economic growth, that this expectation is not contrary to dependency/world-economy theoretical formulations, and that a correct test of the effect of export dependence requires an analysis of covariance model specification. Evidence is found for the positive effect of export dependence on economic growth. An interaction model provides support for the contention that the positive effect of export dependence is either reduced or reversed under conditions of export price fluctuation, raw material specialization, commodity concentration, and foreign capital penetration.