Impact of trade openness on economic growth in WAEMU
DOI:
https://doi.org/10.18559/rielf.2021.2.5Keywords:
trade openness, economic growth, threshold, quality of exportsAbstract
The objective of this paper was to determine the effect of trade openness on economic growth in WAEMU countries, focusing on the existence of a threshold effect and on the impact of export quality. To this end, a panel model was estimated using the Pool Mean Group (PMG) approach and the results showed that trade openness has a positive impact on economic growth when the degree of openness measured by (Exports of goods and services + Imports of goods and services)/GDP is below 61.2% of GDP. Above this threshold, the impact of trade openness on economic growth becomes negative. The results also show that without taking the threshold effect into account, trade openness has a negative impact on economic growth. In addition, the results of the study highlight that the improvement in the quality of exports combined with trade openness positively affects economic growth in the WAEMU.
Downloads
References
Alam, K. J., & Sumon K. K. (2020). Causal relationship between trade openness and economic growth: A panel data analysis of Asian countries. International Journal of Eco- nomics and Financial Issues, (1), 118‒126.
View in Google Scholar
Babula, R., & Anderson, L. (2008). The link between openness and long-run economic growth. Journal of International Commerce and Economics, 1‒20.
View in Google Scholar
Belloumi, M., & Alshehry, A. (2020). The impact of international trade on sustainable development in Saudi Arabia. Sustainability, 12(13), 5421. https://doi.org/10.3390/su12135421
View in Google Scholar
Blancheton, B. (2004). Ouverture commerciale, croissance et développement: malentendus et ambiguïtés des débats. (Première Journée du Développement du GRES du 16-17 sep- tembre 2004).
View in Google Scholar
Bruckner, M., & Lederman, D. (2012). Trade causes growth in Sub-Saharan Africa. (The World Bank Policy Research Working Paper No. 6007). http://dx.doi.org/10.1596/1813- 9450-6007
View in Google Scholar
CEA. (2013). Diversification et sophistication comme levier de la transformation structurelle des économies Nord Africaines. Retrieved from https://hdl.handle.net/10855/22298
View in Google Scholar
Chenery, H. B., & Bruno, M. (1962). Development alternatives in an open economy: The case of Israel. Economic Journal, 72(1), 70‒103.
View in Google Scholar
Cobb, C. W., & Douglas, P. H. (1928). A theory of production. American Economic Review, 18, 139‒165. Retrieved from https://www.aeaweb.org/aer/top20/18.1.139-165.pdf
View in Google Scholar
Delorme, H., Lipchitz, A., & Bonnet, A. (2007). Dynamique des prix agricoles internationaux. Notes et Études Économiques (NEE) N°27, Service des Stratégies Agricoles et Industrielles Sous-direction de l’Évaluation, de la Prospective, des Études et de l’Orientation. Direction Générale des politiques Économique Européenne et Internationale. Retrieved from www. agriculture.gouv.fr/
View in Google Scholar
Findlay, R. (1984). Growth and development in trade models. In R. W. Jones & P. B. Kenen (Eds.), Handbook of international economics (vol. 1, pp. 185‒236). Amsterdam: Elsevier. Grossman, G., & Helpman, E. (1990). Comparative advantage and long-run growth. American Economic Review, 80(4), 796‒815.
View in Google Scholar
Guei, K., & Le Roux, P. (2019). Trade openness and economic growth: Evidence from the Economic Community of Western African States region. Journal of Economic and Financial Sciences, 12. https://doi.org/10.4102/jef.v12i1.402
View in Google Scholar
Hausmann, R., Hwang, J., & Rodrik, D. (2007). What you export matters. Journal of Eco- nomic Growth, 12, 1–25. https://doi.org/10.1007/s10887-006-9009-4
View in Google Scholar
Huchet, M., Mouël, C., & Vijil, M. (2018). The relationship between trade openness and economic growth: Some new insights on the openness measurement issue. The World Economy, 41, 59‒76. https://doi.org/10.1111/twec.12586
View in Google Scholar
Jin, J. C. (2004). On the relationship between openness and growth in China: Evidence from provincial time series data. The World Economy, 27(10), 1571‒1582.
View in Google Scholar
Keho, Y. (2017). The impact of trade openness on economic growth: The case of Cote d’Ivoire. Cogent Economics & Finance, 5(1). https://doi.org/10.1080/23322039.2017.1332820
View in Google Scholar
Kong, Q., Peng, D., Ni, Y., Jiang, X., & Wang, Z. (2020). Trade openness and economic growth quality of China: Empirical analysis using ARDL model. Finance Research Letters, 38, 1544‒6123.
View in Google Scholar
Lopez, A. (2005). Trade and growth: Reconciling the macroeconomic and microeconomic evidence. Journal of Economic Surveys, 19(4), 623‒648.
View in Google Scholar
Pelinescu, E. (2015). The impact of human capital on economic growth. Procedia Economics and Finance, 22, 184-190. https://doi.org/10.1016/S2212-5671(15)00258-0
View in Google Scholar
Pesaran, H. H., & Shin, Y. (1997). An autoregressive distributed lag modeling approach to co-integration analysis. (Research Papers in Economics).
View in Google Scholar
Pesaran, M., Shin, Y., & Smith, R. (1999). Pooled mean group estimation of dynamic heterogeneous panels. Journal of the American Statistical Association, 94(446), 621‒634. https://doi.org/10.2307/2670182
View in Google Scholar
Ramzan, M., Sheng, B., Shahbaz, M., Song, J., & Jiao, Z. (2019). Impact of trade openness on GDP growth: Does TFP matter?. The Journal of International Trade & Economic Development, 28(8), 960‒995. https://doi.org/10.1080/09638199.2019.1616805
View in Google Scholar
Romer, P. (1986, October). Increasing return and long-run growth. Journal of Political Economy, 94(5), 1002‒1037.
View in Google Scholar
Sachs, J., & Warner, A. (1995). Economic reform and the process of global integration. Brookings Papers on Economic Activity, 1-118.
View in Google Scholar
Sheikh, M. A., Malik, M. A., & Masood, R. Z. (2020). Assessing the effects of trade openness on sustainable development: Evidence from India. Asian Journal of Sustainability and Social Responsibility, 5(1). https://doi.org/10.1186/s41180-019-0030-x
View in Google Scholar
Solow R. M. (1956). A contribution to the theory of economic growth. The Quarterly Journal of Economics, 70(1), 65‒94. https://doi.org/10.2307/1884513
View in Google Scholar
Stiglitz, J. E. (2009). La grande désillusion (9ème ed.). Barcelona: Litografia Roses.
View in Google Scholar
Verter, N., & Bečvářová, V. (2016). The impact of agricultural exports on economic growth in Nigeria. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 64(2), 691‒700. https://doi.org/10.11118/actaun201664020691
View in Google Scholar
Winters, A. (2004). Trade liberalization and economic performance: An overview. The Economic Journal, 114(493), F4‒F21. http://dx.doi.org/10.1111/j.0013-0133.2004.00185.x
View in Google Scholar
Zahonogo, P. (2017). Trade and economic growth in developing countries: Evidence from sub-Saharan Africa. Journal of African Trade, 3(1‒2), 41‒56. https://doi.org/10.1016/j.joat.2017.02.001
View in Google Scholar
Downloads
Published
Issue
Section
License
Copyright (c) 2021 Poznań University of Economics and Business
This work is licensed under a Creative Commons Attribution 4.0 International License.
