The Influence of Exports and Imports on Economic Growth in Palestine

Abstract

Economic, commerce, and job opportunities have been severely disrupted in the Palestinian territories (PTs) for the previous several decades. Palestinian external trade was plagued by several challenges, including Israeli restrictions on trade with neighboring nations and the rest of the globe. A country's trade balance is heavily influenced by its exports and imports. Exports are often regarded as a catalyst for economic growth and social progress because of their ability to reduce poverty. This paper aims to check whether the GDP (dependent variable) has a relationship with exports of goods and services and imports of goods and services (independent variables) in Palestine. An econometric model is built to examine the direct relations between the three variables: exports, imports, and economic growth in Palestine. An econometric model is constructed to explore the direct relations between the three variables: exports, imports, and the economic growth of Palestine. To accomplish this goal, yearly data (2007–2020) was tested using the OLS (Ordinary Least Squares), Engle-Granger Cointegration, and Gretl Causality tests, and the data was obtained from the Palestinian Central Bureau of Statistics (PCBS). The results show no relationship between the three variables in Palestine. However, we can observe strong evidence of the relationship between exports and economic growth.