Macroeconomic Determinants of Export Performance

Abstract

This chapter examines the influence of macroeconomic factors (real effective exchange rate, real wages and real manufacturing output) on Sri Lanka’s manufactured export performance in 1974–91 using an econometric mode1.¹ The econometric technique used here, based on cointegration analysis and error correction models, is different to previous work on developing countries. Section 4.2 briefly reviews cointegration analysis and error correction models. Section 4.3 sets out an econometric model of an export supply function for Sri Lanka and the results. Section 4.4 summarizes.