The comovement between exports and productivity observed in many countries suggests a direct link between these two variables. This paper tries to establish whether such a causal link exists for four developed market economies, using co-integration and Granger-causality techniques. These techniques offer a means to overcome serious problems encountered in previous attempts to examine this relationship, while recent trade theory suggests that the relationship between trade and productivity is fundamentally ambiguous. Both reasons call for more empirical evidence. The findings of the econometric analysis suggest that exports, productivity and the terms of trade move together in the long run in all countries except the United Kingdom.

The causes of the wide variation in growth rates between countries have been debated by theorists of economic growth. Different studies have shown these disparities between growth rates largely to have been caused by different rates of increase in productivity per unit of factor input. The observed comovement between productivity and export growth suggest a direct link between these two variables. The paper explores the causal relationship between productivity and exports based on Austrian data using time series analysis. The causality analysis indicates no causal link from exports to productivity while the null of no causality from productivity to exports has to be rejected at conventional levels.