Testing the long-run relationship between export and economic growth: Evidence from Namibia.

Abstract

This study investigates the export-economic growth relationship for Namibia. The study was motivated by the contradicting results in the literature of the export and economic growth relationship despite the wide theoretical consensus among researchers that “export expansion is the engine of economic growth.” Namibia was chosen as a case study since the Namibian government also put some weights on export promotion as one of its growth strategies. The study models the relationship through the augmented neoclassical production function framework. The Johansen co-integration test, the vector-error correction model (VECM) and the Granger causality tests were employed to test for the nature of the relationship. The Granger causality test indicates a uni-directional causation from export to economic growth. This allows us to confirm the validity of the export-led growth hypothesis in the case of Namibia. The findings also suggest that economic growth is dependent on export performance in a way. Therefore Namibia can enhance its economic growth by improving upon the competitiveness of its exported items.