Relationship between International Trade and Economic Growth: A Cointegration Analysis for Zimbabwe

Abstract

The relationship between trade and economic growth has continued to dominate the debate in trade and development economics. Generally, countries which trade more have been seen to have a high growth path, some of which has been attributed to trade. However, it is very difficult to attribute much of the growth to trade and trade openness. The focus of this research paper is therefore to investigate if there exists a long run relationship between various trade and other macroeconomic variables for Zimbabwe for the period 1975 to 2005. The study employs the cointegration approach to establish the existence of a long run relationship between economic growth and trade variables. The results of the study indicate that trade and economic growth are cointegrated, but the relationship is strengthened by the stability of the macroeconomic policy since negative macroeconomic drivers such as rising inflation can constrain economic growth. Openness to trade is also deemed to play a crucial role, where reduction and elimination of barriers to trade promote growth in trade and ultimately economic growth.

International trade and economic growth in Africa: The role of the digital economy

“…Our finding is consistent with (Polat et al, 2015). On the other hand, the result is inconsistent with the findings by (Asiedu, 2013;Caleb et al, 2014;Chang & Mendy, 2012;Ehigiamusoe & Lean, 2018;Hossain & Mitra, 2013). Furthermore, the result also does not congruent with the theoretical hypothesis that international trade enhances economic prosperity.…”

“…TRADE exhibits a positive and statistically significant impact on economic growth in models 1 and 3 at a 1% significance level on average ceteris paribus. As noted by (Caleb et al, 2014;Chang & Mendy, 2012;Ehigiamusoe & Lean, 2018;Hossain & Mitra, 2013), international trade has the potential to boost economic growth. This study's results appeared to be in line with the previous results from the literature and the propositions of the mercantilist, classical, and the Heckscher-Ohlin theories of trade.…”

“…This means that international trade stimulates economic prosperity in Africa. Caleb et al (2014) look at the relationship between international trade and Zimbabwe's economic growth from 1975 to 2005. The analysts used a cointegration analysis and reported that trade enhances economic growth in Zimbabwe.…”

Geographic proximity, trade and economic growth: a spatial econometrics approach

“…Several authors have studied determinants of economic growth emphasizing a spatial econometric approach (LeSage and Fischer 2008;Olejnik 2008;Fischer et al 2009;Tian, Wang, and Chen 2010;Ramos, Suriñach, and Artís 2010;Lee and Yu 2012;Yu Ho, Wang, and Yu 2013;Caleb, Mazanai, and Dhoro 2014;Benos, Karagiannis, and Karkalakos 2015; Zahonogo 2016; Ahmad and Hall 2017) and obtained important results for the analysis of regional growth mechanisms. Their research has shown that the spatial effect favours economic growth.…”

The Structure of Import in Indonesia: A Contribution and Share “Peranan” Assessment

“…High and low-income countries have conducted research that analyzes the causal relationship between international trade and economic growth. International trade has an optimal influence on a country's economic growth (Javed, Qaiser, Mushtaq, Saif-ullaha, & Iqbal, 2012); (Caleb, Mazanai, & Netsai L, 2014); (Mogoe & Mongale, 2014) (TAPŞIN, 2015); (Abdullahi, Safiyanu, & Soja, 2016).…”