Nexus between Export Instability, and Exchange Rate Volatility and Economic Growth in Developing Countries
Abstract
Export instability (EI) and exchange rate (ER) fluctuations affect economic growth. SAARC countries have observed more fluctuations in both macroeconomic variables than ASEAN countries. Therefore this study explores the influence of EI, and ER volatility on economic growth in selected SAARC and ASEAN countries for the time period 1995 to 2017. This study incorporates the EI and ER in the Augmented Solow growth model to see the effects on economic growth. To meet the objective of the study, System Generalized Methods of Moment (GMM) is used. The results indicate that variables of interest EI and ER have a negative and significant influence on GDP per capita for SAARC countries. While EI harms economic growth whereas exchange rate has a positive influence on economic growth in ASEAN countries. The control variables such as trade openness, secondary school enrollment, capital formation, and government spending have positively and significantly correlated with GDP per capita growth whereas inflation and population growth has negative and significantly correlated with GDP per capita growth in both groups of countries.
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Copyright (c) 2022 Farhat Rasul
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