The Nexus between Export, Import, Domestic Investment and Economic Growth in Japan

Abstract

This paper investigates the relationship between export, import, domestic investment and economic
growth in Japan. In order to achieve this purpose, annual data for the period between 1970 and 2015 was
tested by using Correlation analysis and regression analysis. The result of the Correlation analysis shows
that all variables are positively correlated. According to the results of the regression analysis estimation,
domestic investment and exports are significant in explaining the economic growth, namely an increase in
domestic exports and investment leads to an increase in economic growth. On the other hand, import has
no effect on gross domestic product. These results provide evidence that exports and domestic
investment, thus, are seen as the source of economic growth in Japan.