Export-Led Growth: Evidence from Post-Communist Serbia

This study examines the export-led growth hypothesis on a small open economy such as Serbia. The main motivation for this research comes from the fact that Serbia has been striving to achieve sustainable growth by focusing on export. This is the first study which has examined the relations between economic growth and export in the Republic of Serbia with the methodology that we have applied here. The trivariate model (export, economic growth, exchange rate) with quarterly data sets has revealed that variables were cointegrated during the time period from 2004 to 2015. The empirical results indicate that there is a unidirectional causality from export to economic growth in both short and long run. The results obtained confirm the export-led growth hypothesis. Serbia may enhance economic growth by enhancing exports. In order to do so, it is necessary to improve the environment for exporters and to harmonize the structure of exports with the EU imports. The empirical results obtained in this study have certain practical implications for economic policy makers. The Government should support export activities and processes in order to enhance growth performances.