Import Liberalization, Export Expansion, and Economic Growth

This paper examines whether export expansion or import liberalization led to economic growth of Korea. The autoregressive distributed lags bounds test and dynamic OLS method are employed as the cointegration tests. Then, error correction models are estimated, whose results show weak evidence of export expansion causing economic growth and strong evidence of import protection, not import liberalization, leading to it. It may be due to the fact that both import protection and export promotion policies were pursued in the early stage of economic growth. There is strong evidence that domestic investment has caused economic growth of Korea, while FDI inflow has not caused it.