The impact of International Trade on GDP: Evidence from Belarus

International Journal of Economics and Management Studies

© 2020 by SSRG - IJEMS Journal

Volume 7 Issue 3

Year of Publication : 2020

Authors : Tatsiana Dziavochka, Mathious Willie, Elyas Abdulahi Mohamued

10.14445/23939125/IJEMS-V7I3P119

How to Cite?

Tatsiana Dziavochka, Mathious Willie, Elyas Abdulahi Mohamued, "The impact of International Trade on GDP: Evidence from Belarus," SSRG International Journal of Economics and Management Studies, vol. 7,  no. 3, pp. 135-142, 2020. Crossref, https://doi.org/10.14445/23939125/IJEMS-V7I3P119

Abstract:

This paper studies the Impact of International Trade on GDP. By using the simple linear regression technique, we examine three equations. Firstly, we established the relationship between GDP and its contributors. It was concluded that International Trade, more specifically Exports, has a positive impact on GDP. The results showed that a 1% increase in Exports would increase by 0.43%. Similarly, a 1% increase in Imports will decrease GDP by 0.43%. Subsequent to that, we use the SITC data to investigate the impact of the different types of Imports and Exports on GDP. The second equation focuses on the relationship between Exports and GDP. The significant variables in this regression are Chemicals and Related Products Exports, Commodities & Transactions Exports, Food, and Live Animals Exports and Manufactured Goods Exports. The results show that a 1% increase in chemical exports will increase GDP by 0.166%. On the other hand, a 1% increase in Commodities & Transactions Exports, Food, and Live Animals Exports, and Manufactured Goods Exports will decrease GDP by 0.09%, 0.27%, and 0.55%, respectively. The third equation focuses on the relationship between Imports and GDP. The results show that Imports have no impact on GDP since all of the variables are insignificant. The paper also places the regression results into context by using the RCA (Revealed Comparative Advantage Index). Overall, Chemical Exports have the highest Trade surplus of the significant variables and have shown consistent Comparative Advantage.

Keywords:

International Trade, SITC Data, GDP, RCA

References:

[1] AsmaArif, H. A., Impact of Trade Openness on Output Growth: Cointegration and Error Correction Model Approach. International Journal of Economics and Financial Issues ,(2012) 379-385.
[2] Brueckner, M., &Lederman, D., Trade openness and economic growth: Panel data evidence from Sub-Saharan Africa. Economica,82, 1302–1323.10.1111/ecca.12160(2015).
[3] Chen, H., A Literature Review on the Relationship between Foreign Trade and Economic Growth. International Journal of Economics and Finance, (2009)127-130.
[4] Dollar, D.,Outward-Oriented Economies Really Do Grow More Rapidly: Evidence from 95 LDCs. Economic Development and Cultural Change, (1992)523- 544.
[5] HaticePehlivan, J. S., The bounds test approach for cointegration and causality between financial development, international trade, and economic growth: the case of Cyprus. Applied Economics,(2010) 1699-1707.
[6] An Empirical Analysis of the Relationship Between Foreign Trade and Economic Growth in Central Africa. 13th ISERD International Conference, Dubai(2010)1-6.
[7] Huang, L. C., &Chang, S. H., Revisit the nexus of trade openness and GDP growth: Does the financial system matter?The Journal of International Trade & Economic Development,23(2014).
[8] Hye, Q. M., Wizarat, S., &Lau, W.-Y., The impact of trade openness on economic growth in China: An empirical analysis”. The Journal of Asian Finance, Economics, and Business,3(2016)27–37.
[9] Kim, D.-H., Lin, S.-C., &Suen, Y. B., The simultaneous evolution of economic growth, financial development and trade openness. The Journal of International Trade & Economic Development,21, (2012)513–537.
[10] Lal, A.K., Foreign Direct Investment, Trade Openness and GDP in China, India, and Mexico.The Singapore Economic Review, (2017)1059–1076.
[11] Lawal, A. I., Nwanji, T. I., Asaleye, A., &Ahmed, V.,Economic growth, financial development, and trade openness in Nigeria: An application of the ARDL bound testing approach. Cogent Economics and Finance,4(2016)1–15.
[12] Mogoe, S.,The Impact of International Trade on Economic Growth in South Africa: An Econometric Analysis”.Mediterranean Journal of Social Sciences, (2014)60-66.
[13] Musila, J. W., &Yiheyis, Z., The impact of trade openness on growth: The case of Kenya. Journal of Policy Modeling,37, (2015)342–354.
[14] Patrick Enu, 2. D.,The Impact of Foreign Trade on Economic Growth in Ghana (1980 – 2012).International Journal of Academic Research in Economics and Management Sciences, (2013)174-191.
[15] Polat, A., Shahbaz, M., Rehman, I. U., &Satti, S. L.,Revisiting linkages between financial development, trade openness and economic growth in South Africa: Fresh evidence from combined cointegration test”. Quality and Quantity,49(2015)785–803.
[16] Richard Nana Boakye, E. G., The Impact of Foreign Trade on the Economic Growth of Ghana.International Journal of Business Marketing and Management , (2017)20-27.
[17] Safana SHAHEEN, M. S., Financial Development, International Trade, and Economic Growth: Empirical Evidence from Pakistan. Romanian Journal of Fiscal Policy ,(2011) 11-19.
[18] Sakyi, D., Villaverde, J., Maza, A., Trade openness, income levels, and economic growth: The case of developing countries, 1970–2009. The Journal of International Trade & Economic Development,24(2015)860–882.10.
[19] Tekin, R. B., Development aid, openness to trade and economic growth in the least Developed Countries: bootstrap panel Granger causality analysis. Procedia - Social and Behavioral Sciences ,(2012)716-724.
[20] G. Vijayasri, G., The Importance of International Trade In the world. International Journal of Marketing, Financial Services & Management Research, (2013)111-119.
[21] Were, M., Differential effects of trade on economic growth and investment: A cross-country empirical investigation.Journal of African Trade, (2015)71-85.
[22] Yuhong Li, Z. C., Research on the Relationship between Foreign Trade and the GDP Growth of East China—Empirical Analysis Based on Causality. Modern Economy, (2010)118-124.
[23] Zahonogo, P., Trade and economic growth in developing countries: Evidence from sub-Saharan Africa. Journal of African Trade, (2017)41-56.
[24] Zahoor Hussain Javed, I. Q.-u., Effects of International Trade On Economic Growth: The Case Study of Pakistan. International Journal of Academic Research in Progressive Education and Development, (2012)103-113.