The Causal Relationship and Cointegration Between GDP and Exports in Jordan for the Period (1994-2023)

Abstract

             This study aims to examine and measure the impact of exports on the gross domestic product (GDP) of the Jordanian economy using annual time series data for the period 1994–2023. A descriptive and quantitative analytical approach was applied to describe the variables and analyze the relationship between exports and GDP. To determine the existence of a long-term equilibrium (cointegration) relationship between the variables, the Johansen-Juselius methodology was employed. The results indicate the presence of a long-term, unidirectional equilibrium relationship from exports to GDP. Furthermore, the findings reveal that exports have a positive and statistically significant impact on GDP during the study period, with a significance level of less than 1%. Through the analysis of the impulse response function and variance decomposition, it was shown that GDP forecast error variance is explained by its own shocks as well as shocks in exports. By the end of the period, the explanatory power of GDP reached about 77.67%. Thus, any random shock to exports leads to a positive impact on GDP. The study recommends paying more attention to companies and institutions supporting the manufacturing sector in general and export-oriented companies in particular, to explore new markets for Jordanian goods and services. Additionally, it highlights the importance of developing specialized educational and training programs in international trade and global marketing to enhance the skills and readiness of Jordanian human resources. These measures are essential to improve productivity and enhance the competitiveness of Jordanian products in global markets, thereby contributing to sustainable economic growth.