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The Determinants of Export Performance: The Case of Sri Lanka

Author Affiliations

  • 1Department of Economics, Faculty of Commerce and Management, Eastern University, Sri Lanka

Int. Res. J. Social Sci., Volume 5, Issue (8), Pages 8-13, August,14 (2016)

Abstract

This empirical study investigates the determinants of the export performance of Sri Lanka over a period 1980 to 2013. As determinants, the study takes five factors such as gross capital formation, foreign direct investment, interest payment on foreign debt, import, weighted average of per-capita income of the export destination countries into consideration. As a first step, the Unit root analysis is employed to test stationary properties of the variables. As a second step, Johansenís Co-integration maximum likelihood method is employed to test the long run relationship among the non-stationary variables. As a third step, the Vector Error Correction Model was employed to describe the dynamic interrelationship among the variables. The results derived from this study suggest that all variables are significantly influencing on the export in the long run. In the long run, foreign direct investment, interest payment on foreign debt and import are found to have a positive impact, whereas gross capital formation and per capita income of the export destination countries have a negative impact. Foreign direct investment and per capita income of export destination countries significantly affect in the short run whereas import, gross capital formation and interest payment for debts are insignificant.

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