Scholars Bulletin (SB)
Volume-5 | Issue-08 | Sch Bull, 2019; 5(8): 477-486
Research Article
The Impact of Import Flows and Trade Regime on Economic Growth: A Granger Causality Investigation on Zambia (1970-2015)
Saviour Lusaya
Published : Aug. 30, 2019
Abstract
The comparative advantage theory still remains one of the most applicable theories in international trade. Through international trade, countries have recorded increased economic growth and welfare through the flow of imports and exports. However, this flow of trade has not been without challenges resulting in governments implementing trade controls. It has, however, been argued that such controls will constrain growth due to lack of flow of technology and capital. This study was, therefore, aimed at investigating the causal relationship between import and economic growth using trade liberalization as a dummy variable. Using time series data from 1970 to 2015 and Johansen Cointegration, the study found the variables to be cointegrated. The Granger Causality test found unidirectional causality from imports to economic growth and from trade liberalization to imports. The study concluded that the Import-Led Growth model is vital to Zambia’s economic growth as the country is still in its infancy.