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TRADE LIBERALIZATION AND ECONOMIC GROWTH: A PANEL DATA ANALYSIS FOR TRANSITION ECONOMIES IN EUROPE

Year 2019, , 82 - 94, 30.06.2019

Kemal Erkisi , Turgay Ceyhan

https://doi.org/10.17261/Pressacademia.2019.1047

Abstract

Purpose- In this study, the long-term and the short-term relationships between economic growth and trade liberalization for 13 transition countries in Europe were examined.

Methodology- The dataset includes 303 observations from 1995 to 2016 for the variables of gross domestic product (GDP), export (EXP), import (IMP), gross fixed capital formation (GFCF), foreign direct investment (FDI) and human capital (HC). PLS Test, Pesaran (2004) CD-Test, Pesaran (2007) Unit Root Test, Swamy S Homogeneity Test conducted before causality and cointegration analysis. Dumitrescu & Hurlin (2012) Granger Panel Causality Test for short-term causality, and Westerlund ECM Panel Cointegration and PDOLS Estimator for long-term relationships analyses were employed.

Findings- The short-term outcomes revealed that there is a bidirectional causality between (a) EXP and GDP, (b) GFCF and GDP, (c) FDI and GDP, (d) HC and GDP, and a unidirectional causality (e) from IMP to GDP. The long-term results show that (i) a 1% raise in EXP boosts GDP by 0.39%, (ii) a 1% raise in IMP boosts GDP by 0.11% (iii) a 1% raise in GFCF boosts GDP by 0.37% (iv) a 1% raise in FDI reduces GDP by 1.35%, (v) a 1% raise in HC boosts GDP by 0.54% in the long-term.

Conclusion- Both in the short-term and the long-term trade liberalization has a positive impact on economic growth in mutual way between EXP, IMP and GDP as it is argued by the feed-back hypothesis.

Keywords

Economic Growth Trade Liberalization Export Import Panel Data Analysis

References

  • Abu-Qarn, A. and Abubader, S. (2001). Export-led growth: empirical evidence from the MENA region. Ben Gurion University Monaster Center for Economic Research, 1-34.
  • Acet, H., Erdoğan, S. and Köksal, M. (2016). İthalat, ihracat ve büyüme arasındaki nedensellik ilişkisi: Türkiye uygulaması. Sosyal ve Ekonomik Araştırmalar Dergisi, 16 (31), 145-161.
  • Balassa, B. (1985). Exports, policy choices, and economic growth in developing countries after the 1973 oil shock. Journal of Development Economics, 18 (1), 23-35.
  • Bourdon, M., Mouél, C. and Vijil, M. (2013). The relationship between trade openness and economic growth: some new insights on the openness measurement issue. Hall-Archives, Ouvertes. Fr, Hal Id: 00729399, 1-18.
  • Çeliköz, Y., Barutçu, E. ve Afsal, M. (2017). Ticari dışa açıklık ve ekonomik büyüme arasındaki ilişki; Türkiye örneği. Route Educational and Social Science Journal, 4 (7), 104-118.
  • Dao, A. (2014). Trade openness and economic growth. Mark A. Israel ’91 Endowed Summer Research Fund in Economics. 2. https://core.ac.uk/download/pdf/59252729.pdf (Erişim tarihi: 09.02.2019)
  • Dollar, D. and Kraay, A. (2004). Trade, growth, and poverty. The Economic Journal, 114 (493), 22-49.
  • Edwards, S. (1997). Openness, productivity and growth. What do we really know?. NBER Working Papers, No: 5978.
  • Emsen, Ö. ve Değer, M. (2007). Ticari ve siyasal liberalizasyon ve ekonomik büyüme ilişkileri: geçiş ekonomileri deneyimi. Atatürk Üniversitesi İktisadi ve İdari Bilimler Dergisi, 21 (2), 161-195.
  • Federici, D. and Marconi, D. (2002). On exports and economic growth: the case of Italy. Journal of International Trade and Economic Development, 11 (3), 323-340.
  • Frankel, J. and Romer, D. (1999). Does trade cause growth. American Economic Review, 89 (3), 379-399.
  • Greenaway, D, Leybourne, S. and Sapsford, D. (1997). Modeling growth and liberalisation using smooth transitions analysis. Economic Inquiry, 35 (4), 798-814.
  • Greenaway, D., Morgan, W. and Wright, P. (2002). Trade liberalisation and growth in developing countries. Journal of Development Economics, 67, 229-244.
  • Greenaway, D. and Sapsford, D. (1994). What does liberalization do for exports and growth. Weltwirtschaftliches Archiv, 130 (1), 152-174.
  • Grossman, G. and Helpman, E. (1991). Innovation and growth in the global economy. Cambridge, MA: MIT Press.
  • Gül, E., Kamacı, A. ve Konya, S. (2013). Dış ticaretin büyüme üzerine etkileri: Türk Cumhuriyetleri ve Türkiye örneği. Akademik Bakış Dergisi, 35, 1-12.
  • Idris, J., Yusop, Z. and Habibullah, M. (2016). Trade openness and economic growth: a causality test in panel perspective. International Journal of Business and Society, 17 (2), 281-290.
  • Kaldor, N. (1970). The case for regional policies. Scottish Journal of Political Economy, 17 (3), 337-348.
  • Kılavuz, E. and Topçu, B. (2012). Export and economic growth in the case of the manufacturing industry: panel data analysis of developing countries. International Journal of Economics and Financial Issues, 2 (2), 201-215.
  • Korkmaz, S. ve Aydın, A. (2015). Türkiye’de dış ticaret-ekonomik büyüme ilişkisi: nedensellik analizi. Eskişehir Osmangazi Üniversitesi İİBF Dergisi, 10 (3), 47-76.
  • Krueger, A. (1978). Foreign trade regimes and economic development: liberalization attempts and consequences. Cambridge, MA: Ballinger.
  • Levine, R. and Renelt, D. (1992). A sensitivity analysis of cross-country growth regressions. American Economic Review, 82 (4), 942-963.
  • Lucas, R. (1988). On the mechanics of economic development. Journal of Monetary Economics, 22 (1), 3-42.
  • Majeed, M. (2010). Inequality, trade openness and economic growth in Asia. Applied Econometrics and International Development, 10 (2), 201-212.
  • Medina-Smith, Emilio J. (2001). Is the export-led growth hypothesis valid for developing countries? A case study of Costa Rica. United Nations Conference on Trade and Development, Policy Issues in International Trade and Commodities Study Series No. 7.
  • Mercan, M. ve Göçer, İ. (2014). Ticari dışa açıklığın ekonomik etkileri: Orta Asya ülkeleri için ampirik bir analiz. Uluslararası Yönetim İktisat ve İşletme Dergisi, 10 (22), 27-44.
  • Özcan, C., Özmen, İ. ve Özcan, G. (2018). Ticari dışa açıklık ve ekonomik büyüme arasındaki nedensellik ilişkisi: yükselen piyasa ekonomileri. Selçuk Üniversitesi Sosyal Bilimler Enstitüsü Dergisi, 40, 60-73.
  • Parida, P. and Sahoo, P. (2007). Export-led growth in South Asia: a panel cointegration analysis. International Economic Journal, 21 (2), 155-175.
  • Ram, R. (1985). Exports and economic growth: some additional evidence. Economic Development and Cultural Change, 33 (2), 415-425.
  • Redding, S. (1999). Dynamic comparative advantage and the welfare effects of trade. Oxford Economic Papers, 51 (1), 15-39.
  • Romer, P. (1986). Increasing returns and long-run growth. Journal of Political Economy, 94 (5), 1002-1037.
  • Saçık, S. (2009). Büyümenin bir kaynağı olarak ticari dışa açıklık. Sosyal Ekonomik Araştırmalar Dergisi, 9 (18), 273-294.
  • Sağlam, Y. ve Egeli, H. (2015). İhracata dayalı büyüme hipotezi: Türkiye örneği. Dokuz Eylül Üniversitesi Sosyal Bilimler Enstitüsü Dergisi, 17 (4), 517-530.
  • Samman, E. (2005). Openness and growth: an empirical investigation. Human Development Report 2005, Occasional Paper: 2005/22.
  • Santos-Paulino, A. and Thirlwall, A. (2004). The impact of trade liberalisation on exports, imports and the balance of payments of developing countries. Economic Journal, 114 (493), 50-72.
  • Silajdzic, S. and Mehic, E. (2017). Trade openness and economic growth: empirical evidence from transitions economies, Menagement International Conference, Italy, 24-27 May, 581-594.
  • Singer, H. and Gray, P. (1988). Trade policy and growth of developing countries: some new data. World Development, 16 (3), 395-403.
  • Sprout, R. and Weaver, J. (1993). Exports and economic growth in a simultaneous equations model. Journal of Developing Areas, 27 (3), 289-306.
  • Şerefli, M. (2016). Dış ticaretin ekonomik büyüme üzerine etkisi: Türkiye örneği. Kastamonu Üniversitesi İİBF Dergisi, 13 (5), 136-142.
  • Tullock, G. (1967). The welfare costs of tariffs, monopolies and theft. Western Economic Journal, 5 (3), 224-232.
  • Tunçsiper, B. ve Rençber, E. (2017). Dış ticaret ve ekonomik büyüme arasındaki nedensellik ilişkisi: Türkiye örneği. International Journal of Social Sciences and Education Research, 3 (2), 619-630.
  • Tupy, M. (2005). Trade liberalization and poverty reduction in Sub-Sahara Africa. Policy Analysis, No: 557, (https://object.cato.org/sites/cato.org/files/pubs/pdf/pa557.pdf (Erişim tarihi: 11.02.2019).
  • Türedi, S. ve Berber, M. (2010). Finansal kalkınma, ticari açıklık ve ekonomik büyüme arasındaki ilişki: Türkiye üzerine bir analiz. Erciyes Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 35, 301-316.
  • Ümit, Ö. (2016). Türkiye’de ticari açıklık, finansal açıklık ve ekonomik büyüme arasındaki ilişkiler: sınır testi yaklaşımı. Ömer Halisdemir Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 9 (1), 255-272.
  • Vamvakidis, A. (2002). How robust is the growth-openness connection? Historical evidence. Journal of Economic Growth, 7 (1), 57-80.
  • Yanikkaya, H. (2003). Trade openness and economic growth: A cross-country empirical investigation. Journal of Development Economics, 72, 57-89.
  • Yapraklı, S. (2007). Ticari ve finansal dışa açıklık ile ekonomik büyüme arasındaki ilişki: Türkiye üzerine bir uygulama. İstanbul Üniversitesi İktisat Fakültesi Ekonometri ve İstatistik Dergisi, (5), 67-89.
  • Young, A. (1991). Learning by doing and the dynamic effects of international trade. The Quarterly Journal of Economics, 106 (2), 369-405.
  • Yurdakul, F. and Aydın, M. (2018). Ekonomik büyüme ve dış ticaret arasındaki ilişki: Türkiye üzerine bir uygulama. Uluslararası İktisadi ve İdari İncelemeler Dergisi, 18. EYİ Özel Sayısı, 23-36.
  • Zahonogo, P. (2016). Trade and economic growth in developing countries: evidence from Sub-Saharan Africa. Journal of African Trade, 3 (1-2), 41-56.

Year 2019, , 82 - 94, 30.06.2019

Kemal Erkisi , Turgay Ceyhan

https://doi.org/10.17261/Pressacademia.2019.1047

Abstract

References

  • Abu-Qarn, A. and Abubader, S. (2001). Export-led growth: empirical evidence from the MENA region. Ben Gurion University Monaster Center for Economic Research, 1-34.
  • Acet, H., Erdoğan, S. and Köksal, M. (2016). İthalat, ihracat ve büyüme arasındaki nedensellik ilişkisi: Türkiye uygulaması. Sosyal ve Ekonomik Araştırmalar Dergisi, 16 (31), 145-161.
  • Balassa, B. (1985). Exports, policy choices, and economic growth in developing countries after the 1973 oil shock. Journal of Development Economics, 18 (1), 23-35.
  • Bourdon, M., Mouél, C. and Vijil, M. (2013). The relationship between trade openness and economic growth: some new insights on the openness measurement issue. Hall-Archives, Ouvertes. Fr, Hal Id: 00729399, 1-18.
  • Çeliköz, Y., Barutçu, E. ve Afsal, M. (2017). Ticari dışa açıklık ve ekonomik büyüme arasındaki ilişki; Türkiye örneği. Route Educational and Social Science Journal, 4 (7), 104-118.
  • Dao, A. (2014). Trade openness and economic growth. Mark A. Israel ’91 Endowed Summer Research Fund in Economics. 2. https://core.ac.uk/download/pdf/59252729.pdf (Erişim tarihi: 09.02.2019)
  • Dollar, D. and Kraay, A. (2004). Trade, growth, and poverty. The Economic Journal, 114 (493), 22-49.
  • Edwards, S. (1997). Openness, productivity and growth. What do we really know?. NBER Working Papers, No: 5978.
  • Emsen, Ö. ve Değer, M. (2007). Ticari ve siyasal liberalizasyon ve ekonomik büyüme ilişkileri: geçiş ekonomileri deneyimi. Atatürk Üniversitesi İktisadi ve İdari Bilimler Dergisi, 21 (2), 161-195.
  • Federici, D. and Marconi, D. (2002). On exports and economic growth: the case of Italy. Journal of International Trade and Economic Development, 11 (3), 323-340.
  • Frankel, J. and Romer, D. (1999). Does trade cause growth. American Economic Review, 89 (3), 379-399.
  • Greenaway, D, Leybourne, S. and Sapsford, D. (1997). Modeling growth and liberalisation using smooth transitions analysis. Economic Inquiry, 35 (4), 798-814.
  • Greenaway, D., Morgan, W. and Wright, P. (2002). Trade liberalisation and growth in developing countries. Journal of Development Economics, 67, 229-244.
  • Greenaway, D. and Sapsford, D. (1994). What does liberalization do for exports and growth. Weltwirtschaftliches Archiv, 130 (1), 152-174.
  • Grossman, G. and Helpman, E. (1991). Innovation and growth in the global economy. Cambridge, MA: MIT Press.
  • Gül, E., Kamacı, A. ve Konya, S. (2013). Dış ticaretin büyüme üzerine etkileri: Türk Cumhuriyetleri ve Türkiye örneği. Akademik Bakış Dergisi, 35, 1-12.
  • Idris, J., Yusop, Z. and Habibullah, M. (2016). Trade openness and economic growth: a causality test in panel perspective. International Journal of Business and Society, 17 (2), 281-290.
  • Kaldor, N. (1970). The case for regional policies. Scottish Journal of Political Economy, 17 (3), 337-348.
  • Kılavuz, E. and Topçu, B. (2012). Export and economic growth in the case of the manufacturing industry: panel data analysis of developing countries. International Journal of Economics and Financial Issues, 2 (2), 201-215.
  • Korkmaz, S. ve Aydın, A. (2015). Türkiye’de dış ticaret-ekonomik büyüme ilişkisi: nedensellik analizi. Eskişehir Osmangazi Üniversitesi İİBF Dergisi, 10 (3), 47-76.
  • Krueger, A. (1978). Foreign trade regimes and economic development: liberalization attempts and consequences. Cambridge, MA: Ballinger.
  • Levine, R. and Renelt, D. (1992). A sensitivity analysis of cross-country growth regressions. American Economic Review, 82 (4), 942-963.
  • Lucas, R. (1988). On the mechanics of economic development. Journal of Monetary Economics, 22 (1), 3-42.
  • Majeed, M. (2010). Inequality, trade openness and economic growth in Asia. Applied Econometrics and International Development, 10 (2), 201-212.
  • Medina-Smith, Emilio J. (2001). Is the export-led growth hypothesis valid for developing countries? A case study of Costa Rica. United Nations Conference on Trade and Development, Policy Issues in International Trade and Commodities Study Series No. 7.
  • Mercan, M. ve Göçer, İ. (2014). Ticari dışa açıklığın ekonomik etkileri: Orta Asya ülkeleri için ampirik bir analiz. Uluslararası Yönetim İktisat ve İşletme Dergisi, 10 (22), 27-44.
  • Özcan, C., Özmen, İ. ve Özcan, G. (2018). Ticari dışa açıklık ve ekonomik büyüme arasındaki nedensellik ilişkisi: yükselen piyasa ekonomileri. Selçuk Üniversitesi Sosyal Bilimler Enstitüsü Dergisi, 40, 60-73.
  • Parida, P. and Sahoo, P. (2007). Export-led growth in South Asia: a panel cointegration analysis. International Economic Journal, 21 (2), 155-175.
  • Ram, R. (1985). Exports and economic growth: some additional evidence. Economic Development and Cultural Change, 33 (2), 415-425.
  • Redding, S. (1999). Dynamic comparative advantage and the welfare effects of trade. Oxford Economic Papers, 51 (1), 15-39.
  • Romer, P. (1986). Increasing returns and long-run growth. Journal of Political Economy, 94 (5), 1002-1037.
  • Saçık, S. (2009). Büyümenin bir kaynağı olarak ticari dışa açıklık. Sosyal Ekonomik Araştırmalar Dergisi, 9 (18), 273-294.
  • Sağlam, Y. ve Egeli, H. (2015). İhracata dayalı büyüme hipotezi: Türkiye örneği. Dokuz Eylül Üniversitesi Sosyal Bilimler Enstitüsü Dergisi, 17 (4), 517-530.
  • Samman, E. (2005). Openness and growth: an empirical investigation. Human Development Report 2005, Occasional Paper: 2005/22.
  • Santos-Paulino, A. and Thirlwall, A. (2004). The impact of trade liberalisation on exports, imports and the balance of payments of developing countries. Economic Journal, 114 (493), 50-72.
  • Silajdzic, S. and Mehic, E. (2017). Trade openness and economic growth: empirical evidence from transitions economies, Menagement International Conference, Italy, 24-27 May, 581-594.
  • Singer, H. and Gray, P. (1988). Trade policy and growth of developing countries: some new data. World Development, 16 (3), 395-403.
  • Sprout, R. and Weaver, J. (1993). Exports and economic growth in a simultaneous equations model. Journal of Developing Areas, 27 (3), 289-306.
  • Şerefli, M. (2016). Dış ticaretin ekonomik büyüme üzerine etkisi: Türkiye örneği. Kastamonu Üniversitesi İİBF Dergisi, 13 (5), 136-142.
  • Tullock, G. (1967). The welfare costs of tariffs, monopolies and theft. Western Economic Journal, 5 (3), 224-232.
  • Tunçsiper, B. ve Rençber, E. (2017). Dış ticaret ve ekonomik büyüme arasındaki nedensellik ilişkisi: Türkiye örneği. International Journal of Social Sciences and Education Research, 3 (2), 619-630.
  • Tupy, M. (2005). Trade liberalization and poverty reduction in Sub-Sahara Africa. Policy Analysis, No: 557, (https://object.cato.org/sites/cato.org/files/pubs/pdf/pa557.pdf (Erişim tarihi: 11.02.2019).
  • Türedi, S. ve Berber, M. (2010). Finansal kalkınma, ticari açıklık ve ekonomik büyüme arasındaki ilişki: Türkiye üzerine bir analiz. Erciyes Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 35, 301-316.
  • Ümit, Ö. (2016). Türkiye’de ticari açıklık, finansal açıklık ve ekonomik büyüme arasındaki ilişkiler: sınır testi yaklaşımı. Ömer Halisdemir Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 9 (1), 255-272.
  • Vamvakidis, A. (2002). How robust is the growth-openness connection? Historical evidence. Journal of Economic Growth, 7 (1), 57-80.
  • Yanikkaya, H. (2003). Trade openness and economic growth: A cross-country empirical investigation. Journal of Development Economics, 72, 57-89.
  • Yapraklı, S. (2007). Ticari ve finansal dışa açıklık ile ekonomik büyüme arasındaki ilişki: Türkiye üzerine bir uygulama. İstanbul Üniversitesi İktisat Fakültesi Ekonometri ve İstatistik Dergisi, (5), 67-89.
  • Young, A. (1991). Learning by doing and the dynamic effects of international trade. The Quarterly Journal of Economics, 106 (2), 369-405.
  • Yurdakul, F. and Aydın, M. (2018). Ekonomik büyüme ve dış ticaret arasındaki ilişki: Türkiye üzerine bir uygulama. Uluslararası İktisadi ve İdari İncelemeler Dergisi, 18. EYİ Özel Sayısı, 23-36.
  • Zahonogo, P. (2016). Trade and economic growth in developing countries: evidence from Sub-Saharan Africa. Journal of African Trade, 3 (1-2), 41-56.
There are 50 citations in total.

Details

Primary Language English
Subjects Business Administration
Journal Section Articles
Authors

Kemal Erkisi 0000-0001-7197-8768

Turgay Ceyhan This is me 0000-0001-5225-297X

Publication Date June 30, 2019
Published in Issue Year 2019

Cite

APA Erkisi, K., & Ceyhan, T. (2019). TRADE LIBERALIZATION AND ECONOMIC GROWTH: A PANEL DATA ANALYSIS FOR TRANSITION ECONOMIES IN EUROPE. Journal of Economics Finance and Accounting, 6(2), 82-94. https://doi.org/10.17261/Pressacademia.2019.1047

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