Is foreign trade relevant to economic growth in the SADC region? (original) (raw)
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Trade openness and economic growth in SADC countries
2018
In spite of the wave of liberalisation studied during the past decades, the debate still remains open on the issue of the trade openness and economic growth nexus. The paper reviews the relationship between trade openness and economic growth for 11 SADC countries for the period between 1990 and 2016. Investments, labour and inflation are incorporated in the model to form a multivariate framework. The study employed the ARDL-bounds test approach and the Pooled Mean Group (PMG) model to estimate the long run relationship among the variables. The evidence suggests that co-integration is detected at the 1% level in all countries with the exception of Malawi, Mauritius, Swaziland and Tanzania. Co-integration is only detected at the 10% level in Tanzania while Malawi, Mauritius and Swaziland the null of no co-integration is not rejected. Furthermore, the results revealed trade openness has a negative impact on economic growth in the long-run.
Trade and Economic Growth: Theories and Evidence from the Southern African Development Community
SSRN Electronic Journal, 2020
This paper empirically tests the hypothesis that trade can act as an engine of growth using panel data for the Southern African Development Community (SADC), a regional integration agreement (RIA) organization, the central objective of whose formation was the need to accelerate, foster, and encourage the region's growth. Our results indicate that during the period covered by this study (2005-2017), export expansion stimulated growth, more openness to trade reduced it, and that the formation of SADC had not yet brought about any effects on growth perhaps because of lack of full establishment of the primary instruments for achieving its central objective. These results lead to three conclusions. Firstly, trade through export expansion seems to be a better solution for SADC for achieving the central objective of its formation. Secondly, more openness to trade seems to jeopardize growth. Finally, the formation of SADC has not yet brought about the expected gains from a RIA. In this context, we recommend that policymakers should consider adopting measures aimed at supporting increased trade through promoting export expansion, achieving strong absorption of negative chocks that usually result from trade, and exploring the possibility of establishing all the planned primary instruments for achieving SADC's central objective.
Does international trade promote economic growth? An evidence from Brunei Darussalam
Purpose-The purpose of this paper is to explore the potential impact of trade openness on economic growth for the economy of Brunei Darussalam. Design/methodology/approach-Empirical analyses are conducted using the autoregressive distributed lagged model (ARDL) procedure and the data used were spanning from 1989 to 2018. Findings-The obtained results indicated a positive and statistically significant relationship between trade openness and economic growth. Similarly, the results also revealed that domestic investment and natural resources positively impacted economic growth. Further, this paper found that human capital has impacted economic growth both negatively and significantly, which is against the prior expectation. Moreover, in the short-run, trade openness and domestic investment have lost its significance level while all other variables have maintained both their significance levels and signs of their coefficients. Practical implications-This paper has provided comprehensive evidence regarding the relationship between trade openness and economic growth for Brunei Darussalam. Therefore, the policymakers of Brunei are suggested to take practical steps to gear up trade liberalization, and hence attain higher growth. Further, a favorable attention is also needed toward economic diversification and encouraging domestic investment to accelerate the long-run economic growth. Originality/value-As this is a comprehensive study on the economy of Brunei Darussalam, therefore, this paper expects that the policymakers would find it useful while formulating and exercising suitable policies related to trade openness.
Caleb Journal of Social and Management Science, 2022
Economic literature identifies international trade as one of the channels through which sustainable economic growth can be achieved. For years, the relevance of trade in economic growth process has been one of the most commonly debated topics among economists and policy makers in Africa. This study investigates the effects of international trade on the economic growth of Economic Community of West African States (ECOWAS) from 2000 to 2018 across the 15 countries of the sub-region. Fixed effect model in a panel data environment was used for the analysis. The variables of interest are real gross domestic product, exports, imports, exchange rate, balance of payments and gross capital formation. The results show that exports, imports, exchange rate and balance of payments exert significant positive effects on economic growth of the ECOWAS, while gross capital formation exerts significant negative effect on growth of the economy of the countries. However, the independent variables jointl...
Foreign Trade and Economic Growth a Panel Regression Analysis
2014
The ongoing debate in the research theory and practise seeks for the definite answer concerning the connection between foreign trade and economic growth. Although theoretical models and empirical analysis are employed in various countries and regions, yet there is still lack of unique answer concerning their relations. Thus, this paper is focused on examining the connection between the foreign trade and economic growth utilizing the group of 84 countries sampled by various criteria into 9 subgroups. Moreover, additionally the paper seeks to provide the answer if the trade openness of the economy influences the economic growth. Utilizing the panel regression analysis the paper demonstrates that the trade openness has moderate effect on the economic growth. Furthermore, despite economic openness other variables influencing economic growth are human capital, FDI and government consumption. The papers suggest that it is necessary to analyze the future shift in the openness of each count...
Foreign Trade Regimes and Economic Growth in Developing Countries
World Bank Research Observer, 1987
The World Bank does not accept responsibility for the views expressed herein which are those of the authors and should not be attributed to the World Bank or to its affiliated organizations. The findings, interpretations, and conclusions are the results of research supported by the Bank; they do not necessarily represent official policy of the Bank. The designations employed, the presentation of material, and any maps used in this document are solely for the convenience of the reader and do not imply the expression of any opinion whatsoever on the part of the World Bank or its affiliates concerning the legal status of any country, territory, city, area, or of its authorities, or concerning the delimitation of its boundaries, or national affiliation.
Trade Policy and Economic Growth in Sub-Saharan Africa: A Panel Data Approach
American journal of trade and policy, 2014
Despite a number of multi-country case studies utilizing comparable analytical frameworks, numerous econometric studies using large crosscountry data sets, and important theoretical advances in growth theory, there is still disagreement among economists concerning how a country's international economic policies and its rate of economic growth interact. The central objective of this paper is to empirically assess the link between trade policy and economic growth in Sub-Saharan Africa countries. Apart from reviewing different literatures, this study also provides empirical evidence on the relationship between economic growth and trade policies. In doing so, the study used a panel data covering 47 Sub-Saharan Africa countries over the periods 2000-2008. The estimation support claims that openness to international trade stimulates both economic growth and investment. Besides, trade policies such as average weighted tariff rate and real effective exchange rate have both direct and indirect impacts on economic growth.
Appraisal of Trade Potency on Economic Growth in Sudan: New Empirical and Policy Analysis
Asian Development Policy Review, 2017
This paper investigates the relationship between domestic investment, exports, imports, and economic growth in Sudan. In order to achieve this purpose, annual data were collected from the reports of World Bank for the periods between 1976 and 2015, was tested by using Augmented Dickey-Fuller (ADF) and Phillip-Perron (PP) stationary test, co integration analysis of Vector Error Correction Model and the Granger-Causality tests. According to the result of the analysis, unit root tests show that economic growth, domestic investment, exports and imports series become stationary when first difference is considered. Also, it was determined by using co integration analysis that there is relationship between the four variables in Sudan. Also, and according to the Vector Error Correction Model, there is no relationship between variables in the long run term. On the other hand, and according to the Granger-Causality tests, we defined that in the short run term, only economic growth cause domestic investment. These results provide evidence that Reforms and measures in economic strategies are still insufficient to make trade and domestic investment able to boost the Sudan's economy.
Linkages between trade openness and economic growth : evidence from SAARC member countries
2020
Purpose: The current paper revisiting empirical linkanges between trade openness and economic growth in the context of SAARC member countries while, utilized three measure of trade openness. Design/Methodology/Approach: Emperical analysis conducted by panel econometric approach. Findings: The main objective of the study is to revisit empirical linkages between trade openness and economic growth. It is found that trade openness and investment statistically significant and positively contribute to economic growth. Economic growth is multdimentional phenomanon, besides trade openness other determinants such as education and inflation negatively contridbute to economic growth . Practical Implications: The resarch is required for SAARC member countries to remove all those barriers of trade which retard economic growth and also to accelerate process of trade liberationation policy and pay attention to other determinants of growth in order to achieve desirable economic growth in the contex...