Foreign industrial exports and state manufacturing performance

Foreign exports are claiming growing shares of U.S. state economic producti on. While growth of foreign exports is often cited as a driving force for s tate economic growth, little attention has been paid in prior research to t he issue of Granger causality between foreign exports and economic performa nce at the state level. This study examines Granger causality between forei gn manufacturing export growth and state manufacturing performance during t he period from 1980 to 1991. Results indicate that, at the aggregate level, there is a bi-directional Granger causal relationship between foreign expo rts and state manufacturing activity. Among the individual industrial secto rs, results are more mixed, however, with sectors displaying either export- led growth, reverse Granger causality, or in some instances, negative Grang er causality.