Exports, imports, and economic growth in Portugal: evidence from causality and cointegration analysis

This paper investigates the Gran ger-causality between exports, imports, and economic growth in Portugal over the period 1865-1998. The role of the import variable in the investigation of exports-output causality is emphasized, enabling one to test for the cases direct causality, indirect causality, and spurious causality between export growth and output growth. The empirical results do not confirm a unidirectional causality between the variables considered. There is a feedback effect between exports-output growth and imports-output growth. More interestingly, there is no kind of significant causality between import-export growth. Both results seem to support the conclusion that the growth of output for the Portuguese economy during that period revealed a shape associated with a small dual economy in which the intra-industry transactions were very limited. (C) 2001 Elsevier Science BN. All rights reserved.