THE IMPACT OF IMPORT-EXPORT ON ECONOMIC GROWTH IN MADAGASCAR

Abstract

This study investigates the causal relationship between import-export and economic growth in Madagascar by applying Johansen co-integration test and VAR causality model for annual time series data over the period 1975-2017. Based on the findings, import and export can lead to growth of the Malagasy economy. The test of co-integration indicated that there is absence of long run relationship between the variables. According to VAR causality mode, import and export have a unidirectional short run causal effect on economic growth during the studied period. The government should review the planning of trade policies and promote export due to negative trade balance of the country.