TRADE OPENNESS AND ECONOMIC GROWTH IN MOZAMBIQUE

Lawrence Mashimbye and Ashenafi Beyene Fanta

Regional and Sectoral Economic Studies, 2021, vol. 21, issue 2, 37-52

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.

Keywords: economic growth; granger causality; Mozambique; trade openness; VECM. (search for similar items in EconPapers)
JEL-codes: F4 (search for similar items in EconPapers)
Date: 2021
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