Cointegrating and causality relationship between exports and economic growth: case for Botswana

Abstract

The study employed the Autoregressive Distributed Lag (ARDL) Bounds model to test for cointegration and the Toda and Yamamoto and Dolado and Lütkepohl (TYDL) model to examine the direction of causality between exports and economic growth for Botswana covering the period 1980 to 2021. Exports statistically positively affect economic growth both in the short-run and long-run and trade openness is detrimental to economic growth both in the short-run and long-run. Economic growth promotes exports both in the short-run and long-run. Economic growth granger causes exports and indirectly influences exports through trade openness and consumer price index. Furthermore, there exists bidirectional causality between economic growth and the consumer price index. The findings underscore the importance of maintaining a healthy and stable macroeconomic environment in Botswana. In addition, a well-rounded approach that considers both export-oriented industrialization and import substitution strategies remains essential for a robust economic growth trajectory.