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