AJOU Central Library Repository: Examining the Causal Relationship between Economic Growth and Export Expansion

Examining the Causal Relationship between Economic Growth and Export Expansion

Keyword: Economic growth; Export expansion; Terms of trade; Vector Error Correction Model VECM.

Alternative Abstract: This research paper aims at investigating and examining the long run and short run causal linkages between export and economic growth in Palestine by using annual time series data over the period 1994-2016. We employed Johansen-Juseluis maximum likelihood cointegration approach (1990) and tested the Granger Causality based on the multivariate framework of VECM technique. Empirical results revealed that the variables in question, Real GDP, Real export of goods and services, and Terms of trade are cointegrated, i.e. the variables share a common trend and interrelate together in the long run, and therefore, the output growth is positively affected by exports expansion and terms of trade variability in the long run. Furthermore, there is a unidirectional causal relationship flows from exports to economic growth in the long run at (5) percent significant level, while in the short run, export expansion doesn’t Granger-Cause output growth. As a result, policymakers in Palestine need to place considerable emphasis on adopting such economic policies alongside the National export strategy aim at broadening the exporter base through a greater regional economic integration, and hence, taking the advantage of innovational and technological diffusion (spillover effects) associated with such an integration so as to promote exportable sectors and capture the best practices of foreign firms.

Appears in Collections:: Special Graduate Schools > Graduate School of International Studies > Department of International Trade > International Trade > 3. Theses(Master)

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