FOREIGN DIRECT INVESTMENT, TRADE OPENNESS AND GROWTH NEXUS IN LESOTHO

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Journal of Economic and Financial Sciences | JEF| April 2017, 10(1), pp. 145-159

Leseko Makhetha, National University of Lesotho

Joel Rantaoleng, Lesotho Post Bank

Received: June 2015 Accepted: September 2016

(Submit your abstracts to RERIS 2018 and NULISTICE 2018 conferences in January 2018 at www.nulistice.org.ls)

Abstract

This paper examines the long-run relationship among FDI, trade openness and growth in Lesotho for the period 1980-2011. The results show a long-run relationship between output, FDI and trade openness. The VAR Granger causality shows a unidirectional causal relationship running from trade openness, FDI to output and from output, FDI to trade openness.

FDI was found to be insignificant in explaining growth of output in both the long and short run. Trade openness was found to be significant with a negative impact on output growth in the long run but was found to be insignificant in the short run.

Keywords

Lesotho, FDI, Trade Openness, ARDL cointegration, VAR Granger causality/Block, Exogeneity Wald tests
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*Mr L Makhetha is a lecturer in the Department of Economics, National University of Lesotho. [lesekomakhetha@gmail.com]
#Mr J Rantaoleng is the customer relationship officer, Lesotho Post Bank

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