Abstract
This study aims investigate the short- and long-run causal relationship between foreign trade and economic growth in Libya over the study period of 1990 - 2017. This study employs Johansen co-integration test, the error correction model (VECM), and Wald test to meet the objective of the study. The variables utilised in this study are gross domestic product (GDP) growth rate, exports and imports; the data is extracted from various sources such as the Libyan Central Bank and Libyan Ministry of Planning. The results of this study indicate there is a long-run relationship between the foreign trade and economic growth in Libya. In this vein, there is a short-run causality running from exports and imports toward economic growth.
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