Abstract:
Indubitably, striving for greater economic growth that can lead to a general improvement in the well-being of the people constitutes one of the fundamental macroeconomic goals of all modern economies these days. In this study, the possibility of achieving economic growth through trade is investigated. The study employed the unit root test, co-integration test, pairwise Granger-causality test, and forecast error variance decomposition technique to assess the issue under focus by using Namibia as a case study. Further, the study employed quarterly macroeconomic time-series data for the period, 1992 to 2014. The VAR estimates indicate a long-run relationship among the variables investigated. Exports in particular were found to Granger cause economic growth. The forecast error variance decomposition result demonstrates that exports and foreign direct investment contributed more towards innovations in economic growth compared to exchange rate during the chosen time horizon. The study also found that consistently, economic growth itself accounted for a lion share of the innovations that occurred over the selected time horizon. The important message to policymakers in Namibia from the outcome of the study is that the promotion of exports should constitute a crucial part of a country’s macroeconomic policies in order to accelerate economic growth.
