Working Paper Series: Special Edition of 2016 to 2018 Interns

This suggests that member Governments of the ECCU can continue creative initiatives to invite fdi inflows that can contribute to short and long-run economic activity. Once more results are opposing for short-run dynamics with to and ta . The Wald coefficient test reveals that there is no short-run relationship between to and economic growth while ta has been found to have a short-run relationship with economic growth. This lends further support to the argument for assessing the ECCU economies using tourism arrivals to capture their economic openness. Member governments of the ECCU have placed more emphasis with respect to policy and infrastructure to open their economies to international tourism versus building beneficial trade relationships. In fact, trade activities in the ECCU are heavily weighted in importing activity hence the large trade deficits. Previously mentioned, ECCU integration into global trade is because of their construct (non-policy e.g. taste, size) more so than as a result of efforts to trade an abundant endowment (policy oriented). 5.4 Granger Causality Panel Granger causality tests run on the openness indicators provided mix results. fdi has been found to Granger cause economic growth but the reverse relationship does not hold. In other words, the unidirectional short and long-run relationship between fdi and economic growth is a causal one. Therefore, ECCU member governments can construct strategies to increase fdi inflows into the region that would cause economic growth to increase in both the short and long run. With respect to to , testing shows there is no causal relationship running from this variable to economic growth. On the other hand, ta has a unidirectional causal relationship with economic growth in the ECCU. The Granger Causality results give further insight into the nature (direct or indirect) of the impact of both variables. For instance, the results suggest that both fdi and ta have more of a direct causal relationship with economic growth relative to to which gets its impact within the system. In the proceeding discussion, the research provides some assumptions for this outcome.

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