The Relationship between Exports and Economic Growth: The Case Study of Gambia

International Journal of Research and Innovation in Social Science (IJRISS) | Volume III, Issue VI, June 2019 | ISSN 2454–6186

The Relationship between Exports and Economic Growth: The Case Study of Gambia

Musa Sawaneh

Department of Economic Development and International Economics, Kocaeli University, Turkey

Abstract:- Every country’s desire is sustainable economic development through economic growth. For most countries, the consistency of its gross domestic product is of huge concern for its government and policymakers. Either a developed or developing country, economic growth has been seen to promote export; similarly, export is viewed to be an essential determinant of economic growth. But the debate of what causes economic development is heated among researchers and economists as there is yet to be any consensus on the topic. This paper contributes to the investigation of the relationship between export and economic growth for the Gambia from 1990 to 2017. Using annual time series economic data, we applied the econometric techniques of ADF test to prove stationarity, acceptance of the null hypothesis of Granger causality and Johansen’s cointegration test. The Vector Autoregressive (VAR) model was conducted and the findings indicate a positive relationship between export and economic growth. The R-squared of 77.67% from the vector autoregressive test results made us accept the export-led growth hypothesis for the Gambia. Thus, we recommended policymakers to create judicious and strategic policies that would promote export to boost the economic growth of the Gambia.

Keywords: Economic growth, Export, The Gambia, ADF, Granger Causality, Cointegration, Vector Auto regression Test

I. INTRODUCTION

A country that wants to avoid a vicious circle; strong and sustainable economic growth is a primary prerequisite to economic development. The Gambia exports development is a fundamental player in promoting economic growth so to achieve sustainable economic development. It is unarguable that in an economy, there are many contributors to GDP and an increase in a country’s real GDP is seen as an important indicator of a country’s welfare.
The debate of export-led growth hypothesis (ELGH) and the growth-driven export hypothesis (GDEH) is still happening among economist. The proponent of the export-led growth hypothesis claimed that export promotion through meaningful policies like exchange rate depreciation or export subsidies improves economic growth. On the contrary, some economist argued that it is the economy’s growth that naturally boosts export growth through international trade.

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