Investigating the Causal Relationship between Primary Commodities Exports and Economic Growth in Namibia

Abstract

This paper analyses the causal relationship between primary commodities exports and economic growth in Namibia using quarterly data for the period 1998 to 2014. Time-series econometric techniques such as unit root, cointegration as well as Granger-causality test within the vector auto-regression framework has been used. The results of the unit root test showed that the variables are integrated of order one. Furthermore, the results of the Johansen cointegration test revealed that no cointegration exists among the variable, suggesting that there is no long-run relationship. Finally, the results of the Granger-causality test showed that primary commodities exports do Granger-cause economic growth but economic growth does not Granger-cause primary commodities exports. This suggests that there is a unidirectional causality running from primary commodities export to economic growth in the Namibian context.