Journal of Emerging Trends in Economics and Management Sciences: Home

Article Title:
Relationship between Exports, Imports, and Economic Growth in Saudi Arabia: 1990-2011. Evidence from Co-Integration and Granger Causality Analysis
by Majeed A Hussain and Afaf A. Saaed

Abstract:
The study examines the nexus of Exports, Imports and Economic growth in Saudi Arabia, using annual data for the period 1990- 2011. Granger Causality and Cointegration test were employed in the empirical analysis. Using Augmented Dickey-Fuller (ADF) and Phillip-Perron (PP)stationarity test, the variable proved to be integrated of the order one 1(1) at first difference.Johansen and Juselius Cointegration test was used to determine the presence or otherwise of a cointegrating vector in the variables. Both Trace and Maximum Eigenvalue indicated cointegration at 5% level of significance pointing to the fact that the variables have a long-run relationship. To determine the direction of causality among the variables, in the short run, the Pairwise Granger Causality was carried out. Economic growth was found to Granger Cause import. There was a unidirectional causality existing between export and import. But the result of the causation between Exports and economic growth and imports and economic growth was statistically insignificant.

Keywords: co integration, granger causality; exports; imports; economic growth

Download full paper