THE EFFECT OF EXPORT AND IMPORT ON ECONOMIC GROWTH IN INDONESIA

Abstract

To investigate the stimulus of export, import, on economic growth in Oman. Methodology: Yearly data for the periods 1974-2018 were used for testing basic statistics, ADF stationary test, co-integration analysis followed by VAR Model, the Granger causality tests, IRF, variance decomposition test followed with basic diagnos-tic test. Approach: Outcome of ADF analysis shows that economic growth, export, and import become stationary at first difference level. Johansen co-integration analysis indicates short-run affiliation among the three parameters. Findings: Vector auto regressive Model reflects that export has a negative stimulus on economic growth. Though, an import has a positive stimulus on economic growth. Granger causality tests indicate unidirectional causality with both export and import to economic growth. Also, the outcome of the Granger Causality tests indicates that there is unidirectional causality between export and import. Impulse response function revealed a positive shock by both export and import on economic growth in the future. The study emphasizes policymakers’ and its reformist role in promoting the stimulus of import, export that influences the level of economic progress of the Sultanate of Oman.