Co- integration and Causality Relationship Between Capital Goods Imports and Economic Growth of Libya During (1970 -2018)

Abstract

This paper discusses the relationship between capital goods imports and economic growth in Libya, and annual time series data was used during the period 1970-2018. And the technique of joint integration was used to determine the long-term balance relationship between the study variables. According to the Grange test and the VECM model, the results of joint integration confirm that there is one long-term relationship between these variables, and the error correction vector model has been estimated and defined in two parts, the first part is the study of the impact of economic growth on the imports of capital goods in the short and long term, and the second part is the study of the impact Capital goods imports on economic growth in the short and long term, where the results indicate a significant causal relationship in the long run that extends running from economic growth to imports of capital goods and not the other way around. As for the short-term relationship, the results indicate a  unidirectional causality relationship running from imports of goods Capitalism to Economic Growth There is no bidirectional causality relationship  between economic growth and imports of capital goods.