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International trade and Economic growth: cross-country evidence

Author

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  • Josheski, Dushko
  • Lazarov, Darko

Abstract

Many empirical studies have been done to investigate whethere growth is influenced by international trade. But despite the great effort that has been devoted to studying the issue, there is little persuasive evidence concerning the effect of trade on growth. The main subject of our paper is to summarize the main findings based on empirical research that have been done to investigate the relationship between the trade and economic growth by using data for 208 regions and countries in OLS regression analysis. Our results from empirical investigation show: 1) the ratio of trade volume (sum of exports and imports at current prices-current openness or sum of exports plus sum of imports) to GDP as a proxy of trade openness has positive effect on economic growth, 2) black market premium as a proxy for imbalance in macroeconomic policies has negative effect, 3) in the presence of macroeconomic policies, trade has statistically and economic significant positive influence on growth, and 4) in an institutional environment trade lacks influencing growth, the coefficient on institutions is positive and statistically significant.

Suggested Citation

  • Josheski, Dushko & Lazarov, Darko, 2012. "International trade and Economic growth: cross-country evidence," MPRA Paper 42341, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:42341
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    References listed on IDEAS

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    More about this item

    Keywords

    International trade; economic growth; institutions; macroeconomic imbalances;
    All these keywords.

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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