Import‐economic growth nexus: ARDL approach to cointegration

Abstract

Purpose

The purpose of this paper is to examine the relationship between import and economic growth for 62 countries.

Design/methodology/approach

The paper applies autoregressive distributed lag model (ARDL) for long‐run relation and Granger causality test, in order to detect the direction of short‐run and long‐run causal relationship.

Findings

The results indicate that the long‐run relationship exists in the USA, the UK, Japan, Iceland, Canada, Italy, Algeria, Brazil, Chile, Colombia, Cuba, Gabon, Malaysia, Mexico, Peru, South Africa, Uruguay, Bolivia, Cameroon, Cote d'Ivoire, Ecuador, Egypt, El Salvador, Guatemala, Honduras, India, Lesotho, Nicaragua, Papua New Guinea, Thailand, Bangladesh, Benin, Chad, Congo, Gambia, Kenya, Madagascar, Togo, Zambia and Zimbabwe when economic growth is dependent variable. This result confirms the importance of import in the process of sustainable economic growth of these countries. In alternative combination when import is dependent variable, the long‐run relationship is found in the USA, the UK, Japan, Finland, Iceland, Canada, Italy, Brazil, Cuba, Dominican Republic, Iran, Malaysia, Mexico, Peru, South Africa, Bolivia, Cameroon, Guatemala, Honduras, India, Indonesia, Lesotho, Morocco, Nicaragua, Pakistan, Philippines, Senegal, Sudan, Swaziland, Thailand, Tunisia, Bangladesh, Benin, Burkina Faso, Chad, Congo, Gambia, Kenya, Madagascar, Malawi, Mali, Mauritania, Togo and Zambia. These findings confirm the importance of source of economic growth for import. On the other hand, the results of Granger causality test indicate mixed results but the importance is that in the case of higher income countries, there is unidirectional long‐run causality found from import to economic growth (except the USA, Iceland and Italy), and bidirectional long‐run causal relationship exists between import and economic growth in low income countries except Madagascar and Mauritania.

Originality/value

This paper provides the largest sample, including 62 countries, examining the relationship between import and economic growth, from 1971 to 2009.

Citation

Islam, F., Muhammad Adnan Hye, Q. and Shahbaz, M. (2012), "Import‐economic growth nexus: ARDL approach to cointegration", Journal of Chinese Economic and Foreign Trade Studies, Vol. 5 No. 3, pp. 194-214. https://doi.org/10.1108/17544401211263964