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Abstract
In the wake of a severe economic crisis in the 1980s Costa Rica abandoned an import substitution
model of development adopted in the 1960s and implemented policies supporting
foreign investment and the diversification of its exports. This study presents an application
of the model proposed by Herzer and Nowak-Lehnmann to test the hypothesis that export
diversification has contributed to economic growth in Costa Rica via externalities of learningby-
doing and learning-by-exporting over the period of 1965–2006. After using the autoregressive
distributed lags and dynamic ordinary least squares models no long-run relationship
was found between export diversification and growth.