The Effect of the components of exports, Imports, And Economic Inflation on Economic Growth In The Libyan Economy During The Period (1990-2020)

Abstract

A comprehensive of literature review revealed that all studies studded only the effect of gross exports and imports on economic. But this study examined the effect of exports components (oil and non-oil) and imports (capital, intermediate, and consumer goods), as well as inflation, on economic growth during the period 1990–2020. To achieve this objective, a modern econometric methodology was employed, namely stability and cointegration tests using the Autoregressive Distributed Lag (ARDL) model to test the long-term relationship, along with the Error Correction Model (ECM) to estimate the short-term relationship.         

The results indicated that the study variables are Integrated in first-order, and the cointegration test results showed a long-term equilibrium relationship between them. The error correction model also showed that oil exports, capital and intermediate imports had a significant positive effect on economic growth in both the long -short term, for the non-oil exports it had no significant effects on economic growth in either the long -short term. While imports of consumer goods had not affect economic growth in long-term, but it has a significant negative effect in the short term. For the Inflation, it had a significant positive effect in both the long-short term. Therefore, the study recommends that the government promote oil exports, diversify the economy, ensure the availability of intermediate and capital goods, and adopt monetary and fiscal policies to stabilize the general price level.