DOMESTIC INVESTMENT, EXPORT, IMPORT AND ECONOMIC GROWTH IN BRAZIL: AN APPLICATION OF VECTOR ERROR CORRECTION MODEL

Sayef Bakari; Nissar Fakraoui; Sofien Tiba

Sayef Bakari Department of Economics Sciences, Faculty of Economic Sciences and Management of Tunis, University of Tunis El Manar, (Tunisia)
Nissar Fakraoui Department of Economics Sciences, Higher Institute of Companies Administration, University of Gafsa, (Tunisia)
Sofien Tiba Faculty of Economic Sciences and Management of Sfax, University of Sfax, (Tunisia)

Abstract

This paper aims to investigate the nexus between domestic investment, exports, imports, and economic growth for the Brazilian economy during the period 1970-2017, using the VECM methodology. In the short-run, our empirical results pointed out that import, exports, and domestic investment cause economic growth. Also, economic growth causes exports. Exports, imports, and economic growth cause domestic investment. However, in the long-run, our results revealed that domestic investment and exports have a positive effect on economic growth. Also, imports have a negative effect on economic growth. The results recorded a positive impact of economic growth and imports on domestic investment. Exports have a negative effect on domestic investment. Finally, we record the absence of significant impact of economic growth, exports and domestic investment on imports, and economic growth, domestic investment, and imports on exports. Due to the importance of these aspects to the economic performance of Brazil, the policymakers are invited to orient these issues towards the sustainability facets to guarantee a sustained growth path.