A Causal Analysis of the Relationship Among Exports, Human Development and Economic Growth in Kenya: Multivariate Time Series Approach

Abstract

This study examined the causality relationship among the human development, exports of goods and services and economic growth. The study, among others, analyzed the validity of export-led growth hypothesis and human capital endogenous growth hypothesis. Employing VECM and block exogeneity Wald test over 1980-2015 period, human development granger caused economic growth and economic growth granger caused exports at 5% and 10% significance level. There was unidirectional causality effects from human development to economic growth. However, exports granger caused economic growth at 5% and economic growth granger cause exports at only 10% significance level. Hence, there was support of bi-directional causality between exports and economic growth only at 10% significance level.