DOES THE EXPORT-LED GROWTH OR IMPORT-LED GROWTH HYPOTHESIS WORK FOR KAZAKHSTAN? A COINTEGRATION AND GRANGER CAUSALITY INVESTIGATION

Abstract

This study examines the directional relationship between trade components, namely exports and imports, and GDP growth in Kazakhstan. Covering the period from 1993 to 2024, it explores how major structural transformations within the Kazakh economy have reshaped the interaction between international trade flows and national output. To ensure the robustness of the analysis, a three-stage econometric approach is implemented. Initially, stationarity is assessed through the Augmented Dickey-Fuller (ADF) unit root test to establish the integration order of the variables. Subsequently, a Vector Autoregression (VAR) model, applied within a stationary framework, is used to detect stable long-run relationships among exports, imports, and economic growth. Finally, the Granger causality test alongside the Engle-Granger cointegration technique is employed to determine the direction and existence of causal linkages among the variables. The results support the import-led growth hypothesis in the context of Kazakhstan. Although the country has traditionally been viewed as a resource-driven economy with strong reliance on the extractive industry, the empirical evidence suggests an evolving pattern in its growth dynamics. The findings further reveal that sustained economic expansion is more strongly associated with reliable access to advanced imported technologies, indicating that imports play a more decisive role than exports in converting resource-based income into long-term economic development.