Master of Science (MS)
This thesis examines the validity of the export-led growth (ELG) hypothesis in Honduras and compares the Honduran experience to that of other Central American countries, specifically Costa Rica, El Salvador, Guatemala and Nicaragua. It further evaluates the ELG hypothesis for the agricultural sector of Honduras. The conceptual model incorporates exports into a Cobb-Douglas production function and formulates dynamic econometric models of real gross domestic product (GDP), real gross fixed capital formation (GFCF), labor and real exports for the 1970-2000 period. To test for the validity of the ELG hypothesis, Granger-causality was tested on the export coefficients of the growth equation of the vector autoregressive (VAR) or error correction (ECM) model for each country in the short run, long run and in both (in totality). The results indicate that, in El Salvador, evidence supporting the ELG hypothesis was found in the short-run and in totality, it was also found that the ELG hypothesis holds in the long-run for Guatemala and for the non agricultural sector of Honduras. In Nicaragua, exports were found to Granger cause economic growth in the long-run and in totality. No evidence was found to support the ELG hypothesis for Costa Rica, Honduras and the Ag-GDP sector of Honduras. The results imply that efforts being put forth by the government of Honduras to promote total agricultural exports are not sufficiently strong to lead to economic growth over the study period. The strong emphasis in the promotion of maquila exports in recent years, however, seems to have contributed to economic growth from export expansion. Honduras has experienced an expansion of non-traditional agricultural exports over the past two decades. Yet, agricultural exports continue to be dominated by traditional commodities (bananas and coffee). The 1990's brought along low world prices for these traditional products, thus contributing to a slow down in growth of the dollar value of agricultural exports. The efforts by the Honduran government to diversify agricultural exports are a recent experiment, but it seems that contributions of such exports to economic growth are not significantly detected from the 1970-2000 data.
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Release the entire work immediately for access worldwide.
Castro Zuniga, Hermann, "Export-led growth in Honduras and the Central American region" (2005). LSU Master's Theses. 2009.