Export Diversification and Economic Growth: The Case Of the Jordanian Economy

Abstract

The purpose of this study is to study the relationship between export diversification and economic growth in Jordan during the period 1980-2015. The diversification-led growth hypothesis is tested by estimating an augmented Cobb–Douglas production function. Based on the theory of cointegration two types of econometric techniques are used: Johansen's approach to testing cointegration, and the dynamic OLS. These techniques are applied using time series data accommodating structural breaks in the Jordanian economy. Based on the estimation results it is evident that export diversification plays a central role in the economic growth with a positive effect. In addition, the results revealed that export diversification leads the economic growth (expressed as GDP per capita).