Trade and GDP Growth in Morocco: Short-run or Long-run Causality?

This study utilizes cointegration and Granger-causality tests to examine the relationship between trade and economic growth in Morocco over the period 1960-2000 using the VEC model. The result indicate that both exports and imports enter with positive signs in the cointegration equation. The results show that imports and exports Granger caused GDP and imports Granger caused exports. These results can be interpreted as a causality from the foreign sector to the domestic growth of Morocco. Import expansion increases exports that affect the GDP growth.