Acta Universitatis Danubius. Œconomica, Vol. 12, No. 4 - 2
Abstract
Economists have an inclination for quantifying the relationships amongst variables at both
micro and macro levels. In this study, the possibility of a long-run relationship between foreign trade
and economic growth in Namibia is assessed. Exports, foreign direct investment and exchange rates
were used as potential predictors of economic growth, while real gross domestic product served as a
proxy to economic growth. Quarterly time-series macro-economic secondary data sets were utilised
from the period 1990 to 2013. Firstly, the study found positive relationships amongst the four
variables used in the study. Indeed, this positive relationship suggests that the economy of Namibia
can potentially be expanded by means of foreign trade. The result is also in line with broad economic
theory. Secondly, the study found that economic growth responds stronger to changes in exports and
foreign direct investment compared to changes in exchange rates. Thirdly, co-integrating relationships
were found amongst the variables used in the study, implying a long-run relationship amongst these
variables. Lastly, the study found that exports indeed Granger-cause economic growth. The
implications of the research are that the results of the research could be used to improve economic
policy for Namibia and other developing countries.
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