The purpose of the paper is to investigate whether the volume of merchandise
trade and FDI inflows influences economic growth. The period of the study is
1996-97:Q1 to 2008-09:Q3. After investigating the stationarity of the variables,
cointegration analysis has been conducted followed by VECM analysis and
Granger Causality Test. The variables are I(1) processes. While unidirectional
causality is observed from merchandise trade to economic growth, feedback
causality has been observed between FDI inflows and economic growth.
