Link among Domestic Investments, Exports and Economic Growth: New Evidence from Australia

Bakari, Sayef (2024): Link among Domestic Investments, Exports and Economic Growth: New Evidence from Australia.

Abstract

In this study, we conducted a comprehensive analysis of the interplay between domestic investments, exports, and economic growth in Australia from 1972 to 2021. The Vector Error Correction Model (VECM) provided insights into short-term and long-term dynamics, highlighting how deviations from equilibrium are corrected over time and the nature of these interactions. Our findings underscore that domestic investments positively impact GDP, with a 1% increase in investments correlating to a 0.11% increase in GDP in the long run. Conversely, the study found a negative relationship between exports and domestic investments, suggesting that growth in exports does not necessarily lead to increased domestic investment. These insights are crucial for developing balanced economic policies that support both investment and export growth while ensuring sustainable economic development.

• Item Type: MPRA Paper
• Language: English
• Keywords: Domestic Investment, Exports, Economic Growth, VECM, Australia.
• Subjects: C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C32 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes ; State Space Models; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E22 - Investment ; Capital ; Intangible Capital ; Capacity; F - International Economics > F1 - Trade > F13 - Trade Policy ; International Trade Organizations; F - International Economics > F1 - Trade > F14 - Empirical Studies of Trade; F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F43 - Economic Growth of Open Economies; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O47 - Empirical Studies of Economic Growth ; Aggregate Productivity ; Cross-Country Output Convergence

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