TITLE:
The Impact of Imports on Economic Growth in Egypt
AUTHORS:
Rasha M. Elakkad, Asmaa M. Hussein
KEYWORDS:
Economic Growth, Real Imports, Imports’ Demand, ARDL Model, ECM
JOURNAL NAME:
Open Journal of Social Sciences,
Vol.11 No.9,
September
13,
2023
ABSTRACT: Several economic and noneconomic factors can affect
the economic growth of any developing country. The study in hand is concerned
with investigating the impact of real imports on economic growth in Egypt
together with determining the main economic variables that affect the demand of
imports. Initially, the study presented theoretical and empirical literature
for these economic relations displaying the main theories and previous studies
concerning the effect of imports and open-door policies on economic
growth in some developing countries. Then, stepping to the applied analysis, the
empirical examination is presented through two models using an Autoregressive
Distributed Lag (ARDL) bounds estimation technique applied on annual
observations in Egypt since launching the open door policy in 1974 till 2021. The
first model investigates the impact of real imports together with other
explanatory and control variables on the GDP
annual growth rate. Whereas, the second model examines the significance of GDP, purchasing power parity (PPP) (used as a proxy for relative prices—RP), average official exchange rate (ER)
and foreign reserves (FR) on real imports of goods and services in Egypt. The
results of the ARDL bounds tests for both models confirm the existence of a
cointegrated long-run relationship between the dependent and the independent variables. After confirming the long-run
relationship, the short-run coefficients have been estimated by ARDL
error correction model (ECM) to find that in Egypt, it takes a period of less
than two years to adjust any shock in economic growth.