**Table 5: Summary of Regression Results with Other Controls**<sup>18</sup>

||**Merchandise**|**Traditional Services**|**Modern Services**|
|---|---|---|---|
|One variable<br>at a time|RER, Currency<br>crashes: have positive<br>and significant<br>coefficients|RER, FDI, Currency<br>crashes: have positive and<br>significant coefficients|RER, English, crises, FDI:<br>all have positive and<br>significant coefficients|
|Including<br>several<br>variables<br>together|RER has a positive<br>and significant<br>coefficient|RER, FDI, Currency<br>crashes: have positive and<br>significant coefficients|RER has a positive and<br>significant coefficient|

# **4.  Surges**

We now use the Bai-Perron structural break technique to identify export surges.<sup>19</sup> We define a surge when a pair of breaks points to first a significant acceleration and then a significant deceleration of exports. We require the export growth rate to be at least 2 percent for three consecutive years. So defined, the surge lasts until the growth rate falls below this 2 percentage point threshold or until another structural break is identified.<sup>20</sup> To illustrate, in Appendix C, Figure C2-C4, we show the surges identified for India.

We identified 81 surges in exports of merchandise, 100 surges in traditional services, and 80 surges in exports of modern services. Table 6 shows that surges typically last four to five years, although a number of surges of traditional services last only three years.

# **Table 6: Duration of Surges in Exports of Merchandise**

We tried three different education attainment variables available from the Barro and Lee data set: average years of schooling in population more than 15 years of age; percent of population with completed tertiary educations in 25plus age group; percent of population with secondary education completed in 25-plus age group. Recognizing that education is a slow-moving variable even in five-year averages, we estimate regressions with random effects, or just Ordinary Least Squares. Again the results do not change much. We also included tariff on merchandise imports as a measure of trade restrictiveness of merchandise exports; but its coefficient was insignificant. It would have been useful to include an appropriate variable to measure the impact of trade restrictiveness or trade liberalization of services in the regression for exports of services, but the data are not available.

18 Nominal exchange rate volatility has a positive and significant coefficient for traditional services; savings and tariffs are not significant in any of the regressions; the WTO dummy is positive and significant for traditional and modern services. The coefficient on currency crashes is positive and significant, consistent with Gupta, Mishra and Sahay (2007) who show that currency crises may not be detrimental to export growth in developing countries and, that if the countries in question have low external debt, they may indeed be associated with faster export growth. 19 Bai and Perron (2003) derive the rate of convergence and the limiting distributions of the estimated break points. Their approach allows a subset of the parameters to not change (and includes a pure structural change model as a special case). They also address the problem of testing for multiple structural changes: a sup Wald type test for the null hypothesis of no change versus an alternative containing an arbitrary number of changes and a procedure that allows one to test the null hypothesis of, say, l change, versus the alternative hypothesis of l+1 changes. 20 We do consider whether the second point can be considered as a continuation of the same export surge by meeting the same criteria.

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