REASSESSING THE EXPORT-LED GROWTH RELATIONSHIP THROUGH COINTEGRATION METHODS

Abstract

The purpose of this study was to assess the applicability of the export-led growth nexus in the context of Namibia for the period 1990 to 2013 through the application of the Vector Autoregression (VAR) technique, which incorporates the following processes: Unit root tests, determination of the optimal lag length, testing the stability of the vector autoregression system, cointegration tests, estimation of the long-run equation, diagnostic checks for serial correlation, heteroscedasticity and normality, as well as the pairwise Granger-causality tests. Quarterly time series datasets were engaged. The study found cointegrating relationships among the variables that were examined. Further, the study found that export is a good predictor of economic growth. Therefore, the need for Namibia to pay special attention to developments in the export sector of its economy cannot be overstated. Additional research opportunities for upcoming researchers to further probe the issue under consideration are suggested.