THE IMPACT OF INTERNATIONAL TRADE ON THE ECONOMIC GROWTH OF DEVELOPING COUNTRIES:
AN EMPIRICAL STUDY OF KENYA
Assistant Professor Dr Hasan BAKIR
Anadolu University, Eskişehir, 26470, Turkey
The link between trade and economic growth has been the subject of extensive and intensive exploration in the recent past, with several studies measuring different aspects of both. Most of these studies have been concentrated on the developed economies. However, interest has been growing lately to determine the effects of trade and openness on the economies of developing countries. The study applied the Cointegrated VAR (CVAR) approach with steps from ADF test to The Johansen co-integration test to Vector Error Correction Model (VECM) and finally to the VAR granger causality to determine the existence of long-run equilibrium co-integration and causality between international trade and the rate of economic growth. The model included Exports, FDI and Inflation as the regressor variables of GDP and concluded that there is a significant and positive long-run relationship between export and growth with a bidirectional causality where GDP granger causes export, and export granger causes GDP.
Keywords: Causality Test, Technology Spillover, Regression Analysis, VAR, Trade Openness
Cite this article:
Bakir, H. (2019). The Impact of International Trade on the Economic Growth of Developing Countries: An Empirical Study of Kenya. International Journal of Arts and Commerce, 8(7), 38-48.