In order to address these questions, this paper delineates policyrelated factors from other factors that explain differences in economic growth among landlocked countries. These challenges include assessing the quality of data on trade and what, if any, additional resources. Based on the panel data of 16 out of 17 countries in the region, the study found that a one percent rise in. These are sources of economic growth to developing countries. Specifically, the study will add to the extant literature on the impact of trade on economic growth. The link between openness and longrun economic growth. The impact of international trade on economic growth in south africa. The impact of trade liberalization on the ethiopias trade balance. Pdf the impact of trade liberalization on economic growth. This study therefore promised to fill the gap in literatures on international trade studies in. Introduction paper analyzes effects of increased import competition from european union eu countries and outside. The impact of trade liberalization on economic growth has raised a great attention to many researchers in the international trade arena.
Evidence from panel data iyoha and okim be significant to both academicians and policymakers. Impact of international trade on economic growth in. According to the second measure of trade openness exports as a share of gdp, the findings indicate a threshold of 355. The impact of international trade flows on economic growth in. Pdf the impact of international trade on economic growth in. We remark that the theory of economic growth and the theory of international trade, during the classic period, constituted two inseparable branches of economics. International trade and economic growth in developing. The classical economists like adam smith and david ricardo have argued that international trade is the main source. The role of trade in ending poverty english the world bank. Impact of international trade on income and income inequality abstract.
So many researchers have looked at single country effect of export on economic growth, while there are also substantial authors who have examined crosscountry empirical. The studies surveyed show that exchange rate changes and institutional improvements help reduce the effect of a terms of trade shock on growth. The study examines the impact of total exports to gdp ratio, imports to gdp, terms of trade, trade openness, investment to gdp ratio, and inflation on the economic growth of pakistan. In this paper, we will reexamine the impact of the trade volume on.
Effects of exports instability on economic growth 99 2. Openness to international trade has influences on economic growth. Various studies have been conducted however the literature. Economic impact of trade agreements implemented under. This article is devoted to the role of foreign trade in the economies of china, the united states, russia and germany. The impact of trade and economic growth on the environment. This paper explores the impact of trade openness on the economic growth of. The impact of foreign trade on the economic growth of ghana. Negative impacts of economic growth creative destruction. The empirical analysis is conducted by using time series data from 19732010. Overview and policy challenges congressional research service congress faces a number of challenging policy issues relative to trade and the impact of trade agreements on the u. Among the benefits claimed to spring from it, economic growth is probably the most important.
And yet economists continue to argue about, and conduct research on the connection between them. Evoking a shift in trade patterns which in the long run would weaken regional integration, with intra trade in ecowas fading away gradually, nigeria trading with the eu strongly retracts inter trade within ecowas and as such might lead to diversity in growth and economic structure both internally and externallythe other members of ecowas are. This argument is well supported by the fact that access to. The impact of trade liberalization on the ethiopias trade. The impact of trade on economic growth in ecowas countries.
After this threshold, trade s impact on economic growth. Empirical analysis of the effects of trade openness on. Trade expansion may increase longrun growth by allowing the economy to specialize in sectors with economies of scale that arise from research, development. Differential effects of trade on economic growth and investment. Impact of international trade on income and income inequality abstract the impact of international trade on the level and distribution of income has been the field of focus in international economics. Overview and policy challenges congressional research service 1 introduction the united states historically has led the global economic order that evolved after world war ii. The impact of trade liberalization on economic growth in tanzania. Recently, with the introduction of models of endogenous growth, both theories have merged again. The general objective of this study was to assess the impact of international trade on economic growth in kenya with the years under consideration being 1960 to 2010. Generally, economic growth is good for the welfare of an economy. Ogbokor 2001, investigated the macroeconomic impact of oil exports of oil exports on the. However, there are studies that support both negative and positive impact.
There is no shortage of empirical and theoretical studies regarding the role of exports in raising the economic growth and development of a country. In nigeria some authors had examined the performance of foreign trade and economic growth. Our result suggest that the positive sign of the coefficient of non oil. Consequently, the importance of international trade was neglected in the context of economic growth, especially until the 1960s.
The study empirically examined the impact of trade openness on economic growth in nigeria. At an extreme end, some authors find no causal relationship between the two series mutairi, 1993. Nevertheless, the lowratio countries, which are classified as potentially oriented by the world bank, are fitted to this category appropriately. Our bottom line is that the nature of the relationship between trade policy and economic growth remains very much an open question. This study therefore promised to fill the gap in literatures on international trade studies in tanzania. Furthermore, empirical testing of endogenous growth theory is very much in its infancy, particularly with respect to trade and ldcs. International trade and its effects on economic growth in china international trade, as a major factor of openness, has made an increasingly significant contribution to economic growth. According to the world bank 2001, trade liberalization is defined as i the removal of or reduction in the trade.
Brazilian states according to their initial income level. According to him, foreign trade leads to an increase in the owners incomes, relative to excess factors of production and export of the product, and stimulates economic growth. International trade and its effects on economic growth in. What impact does the balance of trade have on gdp calculations. The objectives of this study were to ascertain the impact of export trade on the nigerian economy and to. Consequently, the importance of international trade was neglected in the context of economic growth. In this epoch, it was believed that international trade has a positive effect on the economic growth. Pdf effect of international trade on economic growth in kenya. Evidence on the role of complementarities for cafta.
Inclusive, broadbased growth is hindered by low productivity growth in laborintensive sectors like agriculture, which employs 77 percent of working age adults. Effects of exports instability on economic growth in saarc. Beneficial effects of international trade economic development. The study found that international trade export and import has a significant positive impact on economic growth gdp in bangladesh and. A simple visual analysis of the experience of two industrial and developing countries chosen at random canada and kenya illustrates dramatically the close relationship between sustained economic growth and rising terms of trade see figs.
The relationship between trade openness and economic growth has. The expansion of international trade has been essential to development and reducing poverty but the relationship between economic growth, poverty reduction and trade is not a simple one. Pdf impact of international trade on economic growth of. Although the rate of economic growth and the space and pattern of economic development depends primarily on internal conditions in developing countries, international trade can make significant contribution to economic development. The impact of trade liberalization on economic growth in. International trade and its impact on economic growth emad shafiei m. In the following section, we turn to some of the most cited empirical analyses of the relationship between international trade and growth. The foreign trade balance remained negative, but the percentage of exports covered by imports was 67% the second highest result for the 21 st century.
Pdf effect of international trade on economic growth in. The specific objectives were to ascertain the impact of oil imports, nonoil import, oil exports, and nonoil exports. An econometrics analysis article pdf available in mediterranean journal of social sciences 514 july 2014 with 16,815 reads. International trade and its effects on economic growth in china. Pdf impact of international trade on economic growth in. Developing economists have also been drawn to the causal relationship between the correlation between trade and economic growth. The general objective of this study is to examine the impact of trade liberalization on economic growth in tanzania. International trade in recent decades has considerable growth, so that world trade of goods has exceeded 9. The study employed ordinary least square regression to find out the relationship between trade openness and economic growth.
The assumption that there is a uniquely correct or at least a. For instance, oyejide 1974, using nigeria, as a laboratory test ground that an increase in export proceeds could lead to an expansion. The study examines whether trade openness can be considered as a determinant of economic growth for see countries or not. As the dependent variables, these studies use either economic growth rates or income levels. International trade enables a country to enjoy the. International trade, a key determinate of growth over the years has made a positive contribution to economic growth sun and heshmati, 2010. Imports support jobs and keep costs low, helping u. Aug 27, 2016 impact of international trade on the economic growth of nigeria 19802012. Chinese international trade has experienced rapid expansion together with its dramatic economic growth which has made the country to target the world as its market. There have been empirical studies supporting and opposing trade openness but most of the studies drew the results from cross sectional data. The study employed regression analysis as the method of analysis using cointegration. International trade and economic growth in developing countries neil foster. A student of business management, islamic azad university, rasht branch, rasht, iran abstract. Import impact of economic growth on regional economies martins priede xianjiaotongliverpool university.
Kennedy school of government 79 kennedy street cambridge, ma 028. There result depicts unidirectional reverse causality running from economic growth to exports. In general, the results are largely consistent with the positive impact of trade on economic growth as found in the literature. The main goal of this dissertation is to study the impact that international trade had on the economic growth of portugal and the netherlands in the period 1970. Chow test is used to test the structural break and model fitness. Studies on the effects of international trade on economic growth have varying outcomes. Four different views can be distinguished for the relationship between exports and economic growth. This economic order established multilateral economic institutions to advance rulesbased. This study evaluated the impact of international trade on the nigeria economic growth. In contrast, rate of increase in imports price relative to exports price will adversely impact the economic growth. Education, for instance, has a strong effect on labour productivity. The study examined the impact of foreign trade on economic growth in nigeria. The first is the neoclassical exportled growth hypothesis.
Import substitution strategy, export development strategy, balanced growth strategy, and unbalanced growth strategy 5. Later, during the neoclassic period, these two theories of the economic thought became autonomous relatively to each other. Data this study analyzes bolivia and the impact that financial development and trade openness have had on the countryas economic growth. Pdf impact of international trade on the economic growth. After this threshold, trades impact on economic growth. A number of empirical studies have been carried out on the nexus between openness of trade regime and economic growth world bank, 1987. After this threshold, trades impact on economic growth declines. Some authors have argued that export growth precedes economic growth hence giving a stance to the exportledgrowth elg hypothesis arnade et al. Revisiting the crosscountry evidence linda ramcke and awudu abdulai department of food economics and consumption studies at the university of kiel, olshausenstra. Among tanzanias predominantly rural population 73 percent, economic growth has been limited. In this article we will discuss how trade can contribute to economic growth of a country.
However, trade will have detrimental impact on poor people if the benefits of trade go to nonpoor people. Schumpeter 1942 also coined the term creative destruction which highlights how the progress brought on by economic growth could lead to a. The negative effect of tot can also be explained by. By estimating a cobbdouglas production function, the impact of trade on the economic performance of 38 african countries is measured by. Pdf international trade is one of the leading discussions taken not only in south africa but worldwide on daily basis. International trade in recent decades has considerable growth, so that world trade of goods has exceeded 9 trillion u. To this end, there was a need for this study to examine the impact of trade liberalization on tanzanias economic growth. Pdf the impact of international trade on economic growth.
Trade openness economic growth international trade openness is a channel through which fdi, capital inputs, goods and services flow to host countries or regions. The role of trade in ending poverty english abstract. However, as acemoglu 2009 notes, it tends to create both winners and losers. This report is in response to the request for the first report. Review of literature the detrimental effects of export instability on economic growth and investment were investigated for less developing countries by macbeen and maizels, 1968 for eleven developing countries over the time period 195060 by using single equation regression model. In our economy today we are privileged to make use of the advanced world countries products having risen from improved or advanced technologies of the world. The direction of causalities between the variables is also examined. International trade and its impact on economic growth. The effects of international trade on economic growth. Trade openness, complementarities, growth this paper was prepared for the dr. Trade openess and economic growth in nigeria 1981 2009. The impact of trade openness on economic growth econstor. This research paper provides two opposite hypotheses.
The agriculture sector grew just 4 percent per year over the past decade. Thus, this study analyzed the relationship between international trade and economic growth in west africa from 19912011. The study examines the impact of international trade on economic growth in nigeria, using net export i. Some of the other recent studies on the relationship between trade policy and growth will be discussed in the penultimate section of the paper. American economic growth and job creation depend on open markets abroad. Shehu and youtang 2012 examined the causal relationship between exchange rate volatility erv, trade flows and economic growth of the subsaharan african countries with the reference to nigeria, which is considered as small open economy. Beneficial effects of international trade economic. Quarterly data from 1996 to 2014 for the czech republic and. A skeptics guide to the crossnational evidence francisco rodriguez and dani rodrik university of maryland and harvard university revised may 2000 department of economics university of maryland college park, md 20742 301 4053480 john f.
As was explained in section ii, the indicators of economic growth are tested against indicators of financial development and trade openness to account for a longrun relationship. More specifically, each of the various components of human development is likely to have a distinct impact on economic growth. Jones stanford gsb, stanford, ca, united states nber, cambridge, ma, united states contents 1. Import impact of economic growth on regional economies. Pdf on may 14, 2018, rm malefane and others published impact of trade openness on economic growth.
692 233 1045 1332 999 1520 1400 1345 1264 1371 1057 1070 338 928 171 1183 1401 787 869 926 84 326 104 298 1042 996 375 800 656 1272 562 1183 152 329 1125