Examining the relationship between labor productivity, exports and economic growth in the least developed countries

The World Trade Organization (WTO) and the United Nations (UN) provide extensive technical and financial support to the least developed countries (LDCs), whose roots were laid in 1964 and whose main goal is to overcome the fundamental structural issues with sustainable economic growth. Dependence on only one or a few products in exports, low economic growth, and a low labor productivity rate in these countries, which are some of the leading structural problems, have been the starting points of this study. The aim of this research is to investigate the impact of changes in labor productivity and exports on economic growth in 24 of the 46 nations that comprise the country group as of the 2021 review. Furthermore, the export-led growth model was tested in the selected countries. The panel data analysis method was used to analyze the data. In this framework, Peseran (2004) LM, Peseran (2008) LMadj, and CDLM tests were conducted to determine whether the panel contains cross-sectional dependence. After the panel included cross-section dependency, Peseran and Yamagato's (2008) Slope Homogenity test was applied, and it was concluded that the panel had a heterogeneous structure. As a unit root test, the PANICCA unit root test created by Reese and Westerlund (2016) was used. To determine whether the panel, which remained stationary, continued to behave as a unit over an extended period, the Durbin Hausman (2008) cointegration test was implemented. After it became apparent that the panel had acted together for a significant period, Dumitrescu and Hurlin (2012) conducted the Granger Panel Causality test. This test demonstrated that the variables utilized in the study only showed a unilateral causal relationship between economic growth and labor productivity. However, no causal link between exports and economic growth or between exports and labor productivity was found. For the 24 countries investigated under these findings, it was determined that it would not be reasonable to use the export-based economic growth model.