IDEAS home Printed from https://ideas.repec.org/a/eaa/eerese/v21y2021i2_3.html
   My bibliography  Save this article

Trade Openness And Economic Growth In Mozambique

Author

Listed:
  • Lawrence MASHIMBYE
  • Ashenafi Beyene FANTA

Abstract

Mozambique pursued open trade policy from 1986 and recorded sustained economic growth for over two decades. However, whether or not trade openness contributed to the country’s economic development remains unclear, calling for an empirical examination. To this effect, we examined short-run and long-run relationship between trade openness and economic growth in Mozambique between 1981 and 2017 using Vector Error Correction Model and Granger causality, accounting for government consumption and exchange rate. We report short-run and long-run causality from economic growth to trade openness, not vice versa. We conclude that trade openness is not the reason behind economic growth in Mozambique.

Suggested Citation

  • Lawrence MASHIMBYE & Ashenafi Beyene FANTA, 2021. "Trade Openness And Economic Growth In Mozambique," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 21(2), pages 37-52.
    • Handle: RePEc:eaa:eerese:v:21:y2021:i:2_3
    as

    Download full text from publisher

    File URL: http://www.usc.es/~economet/reviews/eers2123.pdf
    Download Restriction: No.
    ---><---

    References listed on IDEAS

    as
    1. repec:cup:cbooks:9781107034662 is not listed on IDEAS
    2. Nikolaos Dritsakis & Pavlos Stamatiou, 2016. "Trade Openness and Economic Growth: A Panel Cointegration and Causality Analysis for the Newest EU Countries," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 18(59), pages 45-60, March.
    3. Brooks,Chris, 2014. "Introductory Econometrics for Finance," Cambridge Books, Cambridge University Press, number 9781107661455, December.
    4. Mouhamadou Sy & Hamidreza Tabarraei, 2010. "Capital inflows and exchange rate in LDCs: The Dutch disease problem revisited," Working Papers halshs-00574955, HAL.
    5. Malefane, Malefa R & Odhiambo, Nicholas M, 2018. "Trade openness and economic growth: empirical evidence from Lesotho," Working Papers 23787, University of South Africa, Department of Economics.
    6. GUISAN, Maria-Carmen, 2017. "Manufacturing And Development In Countries And Areas Of Europe And Eurasia, 2000-2010," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 17(1), pages 129-142.
    7. Sims, Christopher A, 1980. "Macroeconomics and Reality," Econometrica, Econometric Society, vol. 48(1), pages 1-48, January.
    8. Malefa R. Malefane & Nicholas M. Odhiambo, 2021. "Trade Openness and Economic Growth: Empirical Evidence from Lesotho," Global Business Review, International Management Institute, vol. 22(5), pages 1103-1119, October.
    9. MALEFANE , Malefa Rose & ODHIAMBO, Nicholas M., 2018. "Impact of Trade Openness on Economic Growth: Empirical Evidence from South Africa," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 71(4), pages 387-416.
    10. Levine, Ross & Renelt, David, 1992. "A Sensitivity Analysis of Cross-Country Growth Regressions," American Economic Review, American Economic Association, vol. 82(4), pages 942-963, September.
    11. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 71-102, October.
    12. Hoffman, Dennis L & Rasche, Robert H, 1996. "Assessing Forecast Performance in a Cointegrated System," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 11(5), pages 495-517, Sept.-Oct.
    13. Yaya Keho, 2017. "The impact of trade openness on economic growth: The case of Cote d’Ivoire," Cogent Economics & Finance, Taylor & Francis Journals, vol. 5(1), pages 1332820-133, January.
    14. Mouhamadou Sy & Hamidreza Tabarraei, 2010. "Capital inflows and exchange rate in LDCs: The Dutch disease problem revisited," PSE Working Papers halshs-00574955, HAL.
    15. Thomas Gries & Margarete Redlin, 2012. "Trade Openness and Economic Growth: A Panel Causality Analysis," Working Papers CIE 52, Paderborn University, CIE Center for International Economics.
    16. Karras, Georgios, 2003. "Trade Openness And Economic Growth Can We Estimate The Precise Effect?," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 3(1).
    17. MOYO, Clement Zibusiso & KHOBAI, Hlalefang, 2018. "Trade Openness and Economic Growth in SADC Countries," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 71(4), pages 417-436.
    18. David Dollar & Aart Kraay, 2004. "Trade, Growth, and Poverty," Economic Journal, Royal Economic Society, vol. 114(493), pages 22-49, February.
    19. Raymond Vernon, 1966. "International Investment and International Trade in the Product Cycle," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 80(2), pages 190-207.
    20. Bentour, El Mostafa, 2015. "A ranking of VAR and structural models in forecasting," MPRA Paper 61502, University Library of Munich, Germany.
    21. David F. Hendry & Katarina Juselius, 2001. "Explaining Cointegration Analysis: Part II," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 75-120.
    22. Grossman, Gene M. & Helpman, Elhanan, 1991. "Trade, knowledge spillovers, and growth," European Economic Review, Elsevier, vol. 35(2-3), pages 517-526, April.
    23. Edwards, Sebastian, 1992. "Trade orientation, distortions and growth in developing countries," Journal of Development Economics, Elsevier, vol. 39(1), pages 31-57, July.
    24. Menyah, Kojo & Nazlioglu, Saban & Wolde-Rufael, Yemane, 2014. "Financial development, trade openness and economic growth in African countries: New insights from a panel causality approach," Economic Modelling, Elsevier, vol. 37(C), pages 386-394.
    25. Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-438, July.
    26. John Toye & Richard Toye, 2003. "The Origins and Interpretation of the Prebisch-Singer Thesis," History of Political Economy, Duke University Press, vol. 35(3), pages 437-467, Fall.
    27. Krugman, Paul R, 1981. "Intraindustry Specialization and the Gains from Trade," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 959-973, October.
    28. Gonzalo, Jesus, 1994. "Five alternative methods of estimating long-run equilibrium relationships," Journal of Econometrics, Elsevier, vol. 60(1-2), pages 203-233.
    29. Dollar, David, 1992. "Outward-Oriented Developing Economies Really Do Grow More Rapidly: Evidence from 95 LDCs, 1976-1985," Economic Development and Cultural Change, University of Chicago Press, vol. 40(3), pages 523-544, April.
    30. Ernesto R. Gantman & Marcelo P. Dabós, 2018. "Does trade openness influence the real effective exchange rate? New evidence from panel time-series," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 9(1), pages 91-113, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hlalefang Khobai & Clement Moyo, 2021. "Trade openness and industry performance in SADC countries: is the manufacturing sector different?," International Economics and Economic Policy, Springer, vol. 18(1), pages 105-126, February.
    2. Tarlok Singh, 2010. "Does International Trade Cause Economic Growth? A Survey," The World Economy, Wiley Blackwell, vol. 33(11), pages 1517-1564, November.
    3. Wajdi Bardi & Mohamed Ali Hfaiedh, 2021. "International trade and economic growth: evidence from a panel ARDL-PMG approach," International Economics and Economic Policy, Springer, vol. 18(4), pages 847-868, October.
    4. Iti Vyas, 2020. "Whether the Economic Growth of India is Trade Openness Led?," Eurasian Journal of Economics and Finance, Eurasian Publications, vol. 8(1), pages 38-53.
    5. Utku Utkulu & Durmus Özdemir, 2005. "Does Trade Liberalization Cause a Long Run Economic Growth in Turkey," Economic Change and Restructuring, Springer, vol. 37(3), pages 245-266, September.
    6. Harrison, Ann & Rodríguez-Clare, Andrés, 2010. "Trade, Foreign Investment, and Industrial Policy for Developing Countries," Handbook of Development Economics, in: Dani Rodrik & Mark Rosenzweig (ed.), Handbook of Development Economics, edition 1, volume 5, chapter 0, pages 4039-4214, Elsevier.
    7. Umer Jeelanie Banday & Ranjan Aneja, 2024. "Macroeconomic Stability, Openness, and Economic Growth Nexus: an Insight from BRICS Countries," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(2), pages 5965-5979, June.
    8. Jin, Jang C., 2006. "Openness, growth, and inflation: Evidence from South Korea before the economic crisis," Journal of Asian Economics, Elsevier, vol. 17(4), pages 738-757, October.
    9. Sumbal Fatima & Bateer Chen & Muhammad Ramzan & Qamar Abbas, 2020. "The Nexus Between Trade Openness and GDP Growth: Analyzing the Role of Human Capital Accumulation," SAGE Open, , vol. 10(4), pages 21582440209, November.
    10. Harrison, Ann E. & Rodriguez-Clare, Andres, 2009. "Trade, Foreign Investment, and Industrial Policy," MPRA Paper 15561, University Library of Munich, Germany.
    11. Kudakwashe, Chinyanganya & Regret, Sunge, 2021. "Growth Effects of Foreign Direct Investments in Zimbabwe: Do Sources Matter?," African Journal of Economic Review, African Journal of Economic Review, vol. 9(4), September.
    12. Bolor Khurelchuluun & Liang Cao & Wenshou Yan, 2023. "The Impact of Trade Openness on Economic Growth in Landlocked Developing Countries," International Journal of Science and Business, IJSAB International, vol. 28(1), pages 84-97.
    13. Diaz-Bautista, Alejandro, 2002. "The role of telecommunications infrastructure and human capital: Mexico´s economic growth and convergence," ERSA conference papers ersa02p102, European Regional Science Association.
    14. Hyeon‐Seung Huh & Cyn‐Young Park, 2021. "A new index of globalisation: Measuring impacts of integration on economic growth and income inequality," The World Economy, Wiley Blackwell, vol. 44(2), pages 409-443, February.
    15. Lee, Jim, 2011. "Export specialization and economic growth around the world," Economic Systems, Elsevier, vol. 35(1), pages 45-63, March.
    16. Md. Saiful Islam & Saleh Saud Alsaif & Talal Alsaif, 2022. "Trade Openness, Government Consumption, and Economic Growth Nexus in Saudi Arabia: ARDL Cointegration Approach," SAGE Open, , vol. 12(2), pages 21582440221, May.
    17. Dinopoulos, Elias & Thompson, Peter, 2000. "Endogenous growth in a cross-section of countries," Journal of International Economics, Elsevier, vol. 51(2), pages 335-362, August.
    18. Frankel, Jeffrey A. & Romer, David & Cyrus, Teresa, 1995. "Trade and Growth in East Asian Countries: Cause and Effect?," Center for International and Development Economics Research (CIDER) Working Papers 233408, University of California-Berkeley, Department of Economics.
    19. Aribah Aslam, 2020. "The hotly debate of human capital and economic growth: why institutions may matter?," Quality & Quantity: International Journal of Methodology, Springer, vol. 54(4), pages 1351-1362, August.
    20. David I. Stern, 2011. "From Correlation to Granger Causality," Crawford School Research Papers 1113, Crawford School of Public Policy, The Australian National University.

    More about this item

    Keywords

    economic growth; granger causality; Mozambique; trade openness; VECM.;
    All these keywords.

    JEL classification:

    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eaa:eerese:v:21:y2021:i:2_3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: M. Carmen Guisan (email available below). General contact details of provider: http://www.usc.es/economet/eaa.htm .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.