AN examination of the casual relationship between economic growth, foreign direct investment and exports, in Namibia

Abstract

The study investigated the relationship between economic growth, exports, and FDI in Namibia using quarterly data for the period of 1980:Q1 to 2013:Q4. The Autoregressive Distributed Lag approach to cointegration was used to carry out the study. The study used foreign direct investment (FDI) inflows as a proxy for FDI, export values as a ratio of GDP as a proxy for Exports, and Real Gross Domestic Product as a proxy for economic growth. The results from the study found that economic growth is explained by itself and exports in the short run and that FDI does not have a role to play in explaining economic growth in the short run. The study also established that exports, FDI and GDP do not explain economic growth in the long run. In addition, Granger causality tests revealed bidirectional causality between economic growth, FDI and exports.