An Analysis of Exports and Imports and Their Effect on the Economic Growth in Iraq

Abstract

The Iraqi economy faces more challenges than opportunities, especially in recent years due to the civil war, while basic reforms for merging the private and public sector have commenced. This paper examines the causal relationship between exports, imports, and Iraq’s economic growth. The data are annual time series for the period 1980-2017. Thereafter, the data are stationary in different levels. Johansen cointegration is applied to figure out the long-run association among the variables. Moreover, Granger causality test has been used to direct the causality among variables. This paper finds that in the long run, exports and imports on gross domestic product are co-integrated and variables have a long-run association. The Granger causality result shows that exports affect economic growth, while imports also have a positive impact on Iraq’s economic growth. On the contrary, the relationship between exports and imports show that any increase in the volume of exports will increase the volume of imports. However, the converse is not true as the volume of imports does not influence exports in Iraq.