EXPORT INSTABILITY, INVESTMENT AND ECONOMIC GROWTH IN DEVELOPING COUNTRIES*

Abstract

There is no evidence to show that export instability encouraged the precautionary discounting of investment re turns and so slowed down the rate of investment and, therefore, econo mic growth for a group of forty-four developing countries over the pe riod 1967-81. Export instability did produce revenue instability whic h, in turn, brought about expenditure instability. However, the chain reaction went no further than this. Another important finding is tha t a positive and significant relationship between export instability and economic growth can be obtained simply by using an inappropriate measure of export instability. Copyright 1987 by Blackwell Publishers Ltd/University of Adelaide and Flinders University of South Australia