Has Growth Been Led by Investment or Exports? Prewar and Postwar US, UK, and Japan

The recent few decades have seen a large volume of literature on econometric, cross-country quests for factors promoting growth rates of (per capita) real GDP in a wide range of countries. Though the empirical research is still going on, it is now widely recognized that domestic investment and the volume of exports (both usually in per capita terms or as proportions of GDP) are the two most robust factors promoting economic growth, irrespective of other variables included as possible candidates for growth promoters (Levine and Renelt (1992); some may assert that it will be a sum of exports and imports that affects a country’s economic growth; however, we are concerned with two major demand factors that may affect economic growth; and also Levin and Renelt (1992, p. 953) note in their crosscountry regressions that the results are essentially the same whether one uses exports, imports, or their sum, as the trade volume). Hence it will be a natural development in research agenda to inquire which of the two growth promoters, exports or investment, was more forceful in raising the growth rate in historical contexts of various countries.