IMPACT OF EXPORTS AND IMPORTS ON ECONOMIC GROWTH: NEW EVIDENCE FROM PANAMA

This paper investigates the relationship between exports, imports, and economic growth in Panama. In order to achieve this purpose, annual data for the periods between 1980 and 2015 was tested by using Johansen co-integration analysis of Vector Auto Regression Model and the Granger-Causality tests. According to the result of the analysis, it was determined that there is no relationship between exports, imports and economic growth in Panama. On the other hand, we found that there is a strong evidence of bidirectional causality from imports to economic growth and from exports to economic growth. These results provide evidence that exports and imports, thus, are seen as the source of economic growth in Panama