This document analyzes the effect of international trade on economic growth in Kenya from 1960 to 2010. It uses a multiple linear regression model to examine the relationship between GDP growth rate and several independent variables including exchange rate, inflation, and final government consumption. The findings show that exchange rate had no significant effect on GDP growth, while inflation had a negative and significant effect. Final government consumption had a positive effect on GDP growth in Kenya. The study recommends policies to promote exports, maintain low inflation, and encourage government expenditure on development projects.
THE IMPACT OF TRADE LIBERALIZATION ON ECONOMIC GROWTH; THE CASE OF SUB-SAHARA...AkashSharma618775
The main aim of this research is to explore the effect of trade liberalization on economic growth in subSaharan Africa by analyzing certain macro-economic indicators using Ordinary Least Squares approach to
estimate regression equations. Many developing countries have substantially liberalized their trade regime over the
past three decades, either unilaterally or as part of multilateral initiatives. Nevertheless, trade barriers remain
high in many developing countries. One of the concerns that attributes to the reluctance of many of these countries
to liberalize their trade regime is the possible worsening of the trade balance.
This research paper is meant to give a recommendation on which macro-economic indicators sub-Saharan African
countries should pay particular attention to, implementing the necessary policies to ensure its effectiveness thereby
ensuring a step-up in those aspects of the economy in order to promote development. It considers 46 different
countries with different economic policies in sub-Saharan Africa for a 14-year period. Most papers considering
sub-Saharan African region consider a selected few countries based on certain economic reasons of their choice,
and those who consider most countries in the region have different macroeconomic indicators they employ for their
modeling. This paper considers if not all, almost all sub-Saharan African countries regardless of their economic
status.
The theoretical and empirical relationship between foreign trade and economic growth has extensively been discussed in economics in recent years. There has been a long held belief about the positive correlation between these two variables. In spite of this countless study, the link has been proven to be empirically weak. In view of this, the aim of this dissertation is to empirically examine the relationship between trade and growth. Using trade openness and ordinary least sequence was employed to estimate the impact of foreign trade on Gross domestic product.
This document discusses the relationship between export and economic growth in Nigeria. It begins with an abstract noting that while some economists argue export competition improves productivity, others argue it can negatively impact local industries. The document aims to empirically test the relationship between export and GDP in Nigeria. It provides background on Nigeria's economic history, including a reliance on oil exports. It reviews theories on how export can impact growth, including Ricardo's comparative advantage model. Tables show Nigeria's weak manufacturing exports as a percentage of total exports. The document aims to analyze problems with Nigeria's exports and propose solutions to strengthen manufacturing exports and economic growth.
The document provides an overview of the construction and infrastructure industry in Kenya. It outlines the objective to conduct research on the construction market in Kenya and opportunities in the insurance sector. The methodology involves secondary research using sources like company websites, reports, and news publications. It then covers Kenya's geo-political and macroeconomic environment, key sectors, investment rationale, and segments of the construction market like office, retail, industrial, and residential.
This document summarizes a study that examined factors affecting foreign direct investment (FDI) flows to Ethiopia from 1990 to 2011. The study used a multiple regression model to analyze the relationship between FDI inflows as a percentage of GDP (the dependent variable) and five independent variables: market size, trade openness, inflation rate, infrastructure, and human capital. Time series data from 1990 to 2011 on these variables was obtained from the World Bank and analyzed. The findings showed that trade openness and inflation rate had a significant impact on FDI flows to Ethiopia, while no clear relationship was found for market size, infrastructure, and human capital.
Foreign trade and economic growth in nigeria (1980 2010)Alexander Decker
1. The document discusses foreign trade and economic growth in Nigeria from 1980-2010. It analyzes how foreign trade has impacted Nigeria's economy and growth over this period.
2. Nigeria traditionally relied on agricultural exports like cocoa, palm oil, and groundnuts, but since the 1960s oil has dominated exports. Oil exports now account for over 90% of total exports.
3. While foreign trade can promote growth, Nigeria still faces economic instability and import dependence. The heavy reliance on oil exports has also neglected development of other sectors like agriculture.
Ethiopia’s export performance with major trade partners a gravity model approachAlexander Decker
This document analyzes factors that determine Ethiopia's export flows to major trading partners using a gravity model approach. It examines both supply-side factors like a country's production capacity as well as demand-side factors like market access conditions. The study uses data from 1995-2010 for 14 importing countries and employs a random effects gravity model. The model results show that per capita GDP, population size, and distance between countries significantly impact Ethiopia's export levels, while the effects of Ethiopia's population size and bilateral exchange rates are insignificant or opposite of what was hypothesized.
This document summarizes a research thesis that assesses Nigeria's trade policy between 1984 and 2011. It begins by providing background on Nigeria's pursuit of trade as an engine for development and the historical shifts in its trade policies from protectionism to liberalization. It describes the country's import substitution strategy in early independence, followed by a shift towards exports promotion in 1981. Further policy changes introduced greater trade restrictions and licensing in the 1980s in response to economic pressures. Recent trade policies under NEEDS since 2003 have aimed to gradually liberalize the trade regime while ensuring domestic adjustment costs do not outweigh benefits. However, the research finds that trade policies over this period have not significantly contributed to Nigeria's development.
THE IMPACT OF TRADE LIBERALIZATION ON ECONOMIC GROWTH; THE CASE OF SUB-SAHARA...AkashSharma618775
The main aim of this research is to explore the effect of trade liberalization on economic growth in subSaharan Africa by analyzing certain macro-economic indicators using Ordinary Least Squares approach to
estimate regression equations. Many developing countries have substantially liberalized their trade regime over the
past three decades, either unilaterally or as part of multilateral initiatives. Nevertheless, trade barriers remain
high in many developing countries. One of the concerns that attributes to the reluctance of many of these countries
to liberalize their trade regime is the possible worsening of the trade balance.
This research paper is meant to give a recommendation on which macro-economic indicators sub-Saharan African
countries should pay particular attention to, implementing the necessary policies to ensure its effectiveness thereby
ensuring a step-up in those aspects of the economy in order to promote development. It considers 46 different
countries with different economic policies in sub-Saharan Africa for a 14-year period. Most papers considering
sub-Saharan African region consider a selected few countries based on certain economic reasons of their choice,
and those who consider most countries in the region have different macroeconomic indicators they employ for their
modeling. This paper considers if not all, almost all sub-Saharan African countries regardless of their economic
status.
The theoretical and empirical relationship between foreign trade and economic growth has extensively been discussed in economics in recent years. There has been a long held belief about the positive correlation between these two variables. In spite of this countless study, the link has been proven to be empirically weak. In view of this, the aim of this dissertation is to empirically examine the relationship between trade and growth. Using trade openness and ordinary least sequence was employed to estimate the impact of foreign trade on Gross domestic product.
This document discusses the relationship between export and economic growth in Nigeria. It begins with an abstract noting that while some economists argue export competition improves productivity, others argue it can negatively impact local industries. The document aims to empirically test the relationship between export and GDP in Nigeria. It provides background on Nigeria's economic history, including a reliance on oil exports. It reviews theories on how export can impact growth, including Ricardo's comparative advantage model. Tables show Nigeria's weak manufacturing exports as a percentage of total exports. The document aims to analyze problems with Nigeria's exports and propose solutions to strengthen manufacturing exports and economic growth.
The document provides an overview of the construction and infrastructure industry in Kenya. It outlines the objective to conduct research on the construction market in Kenya and opportunities in the insurance sector. The methodology involves secondary research using sources like company websites, reports, and news publications. It then covers Kenya's geo-political and macroeconomic environment, key sectors, investment rationale, and segments of the construction market like office, retail, industrial, and residential.
This document summarizes a study that examined factors affecting foreign direct investment (FDI) flows to Ethiopia from 1990 to 2011. The study used a multiple regression model to analyze the relationship between FDI inflows as a percentage of GDP (the dependent variable) and five independent variables: market size, trade openness, inflation rate, infrastructure, and human capital. Time series data from 1990 to 2011 on these variables was obtained from the World Bank and analyzed. The findings showed that trade openness and inflation rate had a significant impact on FDI flows to Ethiopia, while no clear relationship was found for market size, infrastructure, and human capital.
Foreign trade and economic growth in nigeria (1980 2010)Alexander Decker
1. The document discusses foreign trade and economic growth in Nigeria from 1980-2010. It analyzes how foreign trade has impacted Nigeria's economy and growth over this period.
2. Nigeria traditionally relied on agricultural exports like cocoa, palm oil, and groundnuts, but since the 1960s oil has dominated exports. Oil exports now account for over 90% of total exports.
3. While foreign trade can promote growth, Nigeria still faces economic instability and import dependence. The heavy reliance on oil exports has also neglected development of other sectors like agriculture.
Ethiopia’s export performance with major trade partners a gravity model approachAlexander Decker
This document analyzes factors that determine Ethiopia's export flows to major trading partners using a gravity model approach. It examines both supply-side factors like a country's production capacity as well as demand-side factors like market access conditions. The study uses data from 1995-2010 for 14 importing countries and employs a random effects gravity model. The model results show that per capita GDP, population size, and distance between countries significantly impact Ethiopia's export levels, while the effects of Ethiopia's population size and bilateral exchange rates are insignificant or opposite of what was hypothesized.
This document summarizes a research thesis that assesses Nigeria's trade policy between 1984 and 2011. It begins by providing background on Nigeria's pursuit of trade as an engine for development and the historical shifts in its trade policies from protectionism to liberalization. It describes the country's import substitution strategy in early independence, followed by a shift towards exports promotion in 1981. Further policy changes introduced greater trade restrictions and licensing in the 1980s in response to economic pressures. Recent trade policies under NEEDS since 2003 have aimed to gradually liberalize the trade regime while ensuring domestic adjustment costs do not outweigh benefits. However, the research finds that trade policies over this period have not significantly contributed to Nigeria's development.
The document discusses the business environment in China by examining the economic, political, and cultural factors that influence business practices. It summarizes that China has a huge potential market but also poses risks due to differences in its political system and culture. The economy has grown significantly through foreign investment and trade, though challenges remain around infrastructure, currency policy, and human rights issues. Understanding these environmental factors is important for foreign businesses operating in China.
Tourism is an important sector for Bangladesh's economy. In 2014, tourism contributed 1.9% of Bangladesh's GDP directly and was expected to grow to 2% of GDP by 2025. Bangladesh earned $158 million from tourism in 2014, and that figure was predicted to rise to $18.4 billion by 2025. International tourist arrivals in Bangladesh were expected to increase from 500,000 in 2014 to 650,000 by 2025. Tourism benefits Bangladesh's economy by creating jobs and income both directly in the tourism industry and indirectly in other related sectors that tourism spending supports.
foreign trade as an engine of economic growthMitikaAnjel
Foreign trade acts as an "engine" of economic growth in three key ways: 1) It enlarges a country's market for exports, leading to greater production and utilization of resources; 2) Expanding exports provides more employment opportunities and economies of scale, lowering costs; 3) Access to global markets encourages innovation as businesses compete with international counterparts, improving efficiency and productivity. For example, the opening of the Suez Canal increased India's exports of commercial crops like cotton and tea, fueling economic growth. Export processing zones also create jobs and incomes, stimulating demand and further domestic manufacturing. Overall, specialization, competition and technological adoption spurred by foreign trade can power economic expansion.
External Trade Benefits and Poverty Reduction in English Speaking West Africa...iosrjce
This research examines the impact of external trade benefits on poverty reduction in five English
Speaking West African Countries (ESWACs) from 1980 to 2013. These countries include; The Gambia, Ghana,
Liberia, Nigeria and Sierra Leone). The study expressed external trade benefits (ETB) as increase in export
earnings (EXE), trade openness (TOP), total government expenditure (TGE) and reduction in foreign exchange
rate (FER), while poverty level is expressed as real gross domestic income (GNI) per capita current US Dollar.
Theoretically, the study relied on five trade theories, in practice; the study constructs a balanced panel data
structure (BPDS) and methodologically, departs from the classical OLS and 1st generation panel econometric
techniques to adopting recently developed 2nd generation panel data econometric methods. The results of the
study reveal that external trade benefits were not found to be significant enough to reduce the poverty level in
ESWACs from 1980 to 2013.This impliesthat external trade benefits did not significantly increase GNI per
capita in ESWACs within the period of study. Based on this result, the study therefore concluded that the impact
of external trade benefits on poverty level is a trivial matter because external trade benefits have not
comprehensively and significantly augmented the status of real gross domestic income (GNI) percapital
currentUSDollar of English speaking West African countries within the period of study. Following this
conclusion we recommended, among others, that policy implication on the result of co-integration of the panel
equation 2 is that more credible expansionary fiscal policy should be pursued as this will help to pump more
money into circulation with the aim of creating and expanding employment opportunities that would be able to
reduce poverty in the region and cut in public investment spending on agriculture and industrial sectors should
be avoided so that the countries will be encouraged to produce locally and also export.
The document summarizes key topics that will be covered in an OCR Economics revision seminar, including the economic recovery in the UK and issues related to globalization. Specifically, it discusses the UK entering a recovery phase in 2013 with GDP growth of 0.6% and 2.4% annually. However, some economists are concerned about long-term unemployment remaining high and the employment rate continuing to fall. The document also reviews global trade trends and debates around regional integration versus globalization.
AS Macro Revision - The Balance of Paymentstutor2u
This document discusses the balance of payments (BoP) and current account. It provides examples of countries that typically run trade surpluses and deficits. Causes of deficits include weak competitiveness and exchange rate issues. Policies to reduce deficits include demand management, exchange rate adjustments, and supply-side reforms. A currency depreciation can initially worsen the trade deficit due to lags but may eventually improve it if certain conditions are met. The UK often runs a trade deficit due to factors like import dependence and weaknesses exporting to growing markets.
This document summarizes a research paper that examines the relationship between trade deficits, foreign direct investment, and economic growth in Rwanda from 2000 to 2015. It finds that trade deficits have a negative long-run impact on economic growth, while foreign direct investment has a positive short-run and long-run impact. The paper uses cointegration and vector error correction models to analyze the data and confirms these relationships statistically. It concludes that Rwanda should continue policies to improve net exports and foreign direct investment to support economic growth.
This is an updated version of a slideshow revision presentation on the way in which different charts are presented in economics exams and some tips for handling the data in your answers.
The document discusses how economic growth and changes in factors of production, technology, and tastes can impact international trade. It examines different types of factor growth, technical progress, and their effects on production possibilities and trade. Growth can lead to increased, decreased, or unchanged trade volumes depending on whether production and consumption effects are pro-trade or anti-trade. In large countries, growth impacts welfare through terms-of-trade and wealth effects, and can potentially cause immiserizing growth under certain conditions. Growth and changes in both trading nations will shift their production possibilities and can influence trade volumes and terms of trade.
This document summarizes a study that investigated the effects of capital goods imports on physical capital formation and economic growth in sub-Saharan Africa countries from 1985 to 2018. The study used data from various sources and employed descriptive statistics, panel Granger causality tests, and panel co-integration as estimation techniques. The results showed that capital goods imports had a positive but small contribution to economic growth and physical capital formation. Panel Granger causality tests also found bi-directional causality between economic growth and capital goods imports, but only uni-directional causality from capital goods imports to physical capital formation. The study concludes that capital goods imports are not large enough to effectively influence growth and capital formation in sub-Saharan Africa,
China has experienced rapid economic growth averaging 10% annually, making it the world's second largest economy. While GDP growth has slowed recently to around 6.5%, the government is taking steps to transition to a more consumption-based economy with a focus on sustainability. Manufacturing dominates China's economy, accounting for over 45% of GDP, while the services sector is growing rapidly and now represents around 44% of GDP. Inequality remains an issue, with the Gini coefficient between 0.47-0.49.
This study investigates specifically the impact of Oil and Non-Oil Products on Nigeria Gross Domestic Product
(GDP). Data were collected for period 1981-2016 Descriptive Statistics and Multiple Linear Regression Approach
was used, defining Oil, and Non-Oil Products as independent variables and Gross Domestic Product (GDP) as
dependent variable. From the analysis, Oil, and Non-Oil Products contributes immensely to the Nigeria Gross
Domestic Product (GDP). Contrary, the Oil Product is positively and insignificant on economic growth of Nigeria
(GDP) and the Non-Oil Product has positively and significant on economic growth of Nigeria (GDP). This study
therefore recommends that Nigeria should enhance her export promotion strategies and diversify her economy far
away from Crude oil.
China has experienced rapid economic growth over the past several decades transitioning from a centralized economy to a more market-based one. This growth was driven initially by cheap exports and foreign investment but China is now focusing on transitioning to a domestic consumer-driven economy. Some challenges for China's future include managing inflation, an aging population, pollution, and sustaining growth of the middle class. Predictions for 2030 see China continuing to be a major global economic force but facing domestic political and economic issues from its development.
This document discusses barriers to greater African participation in global trade and recommendations to address them. It finds that while some African countries have increased exports, many have not due to various barriers. Key recommendations include: 1) Deeper regional economic integration in Africa to create larger markets and exploit economies of scale; 2) Addressing high tariffs and non-tariff barriers African exports face in global markets, particularly for agricultural goods; 3) Improving African infrastructure and production capacity to allow greater processing of exports within Africa rather than just raw materials. Overall, reducing trade barriers both within Africa and faced by African exports globally could significantly boost African economic growth and development.
This document examines whether the Marshall-Lerner condition holds for Kenya's bilateral trade using dynamic panel data analysis. It finds that Kenya has persistent trade surpluses with Uganda, Tanzania, and Netherlands, but large and persistent deficits with China, UAE, India, Germany, and USA. The study applies unit root and cointegration tests to Kenya's bilateral trade data before using mean group estimation. The results indicate that currency devaluation in Kenya would only improve its trade balance according to the Marshall-Lerner condition when considering its bilateral trade with China, UAE, India, and South Africa. The study thus recommends that Kenya should assess currency devaluation decisions on a bilateral rather than aggregate basis.
The document discusses Brazil's economy between 2002 and 2011 based on two figures and an extract.
Figure 1 shows Brazil's GDP per capita increased from $7,800 to $11,700 over this period. Figure 2 shows Brazil's population grew from 176m to 203m. Therefore, Brazil's total GDP increased approximately 53% from $1.78 trillion to $2.73 trillion.
The extract mentions Brazil's currency, the Real, appreciated nearly 40% against other currencies since 2008. This was due to high interest rates attracting speculative capital inflows and increased exports of commodities like soybeans contributing to a current account surplus.
An appreciation could improve Brazil's current account balance in the short-
Globalization has led to both benefits and disadvantages for developing countries. It has encouraged specialization and deeper trade integration, however, it has also contributed to imbalances between and within countries. While globalization has helped lift many people out of extreme poverty, inequality has risen in some places. Overall, reducing inequality through progressive policies could boost aggregate demand and economic growth, but only if tax revenues are spent effectively and social mobility is high enough.
Macroeconomic Variables and Manufacturing Sector Output in Nigeriaijtsrd
Management of macroencomic variables has been noted as instrumental to a well performing manufacturing sector. This study thus examined the effect of macroencomic variables on the manufacturing sector in Nigeria within a liberalised economic era of 1986 to 2018. The Autoregressive Distributive Lag model was employed for data analysis. The results revealed that macroeconomic variables has 93 significant short run policy effect but no significant long run effects on manufacturing sector output in Nigeria. The endogenous dynamics of manufacturing sector previous year outputs exerted a significance influence on the macroeconomic variables long run relationship effect on current year. The explanatory variables suggested that money supply M2 , interest rate INTR and credit to private sector CPS exerted positive effects on manufacturing sector output at short term trends. The study thus posits that macroeconomic variables have varying levels of effects on the manufacturing sectors of Nigerian economy. The monetary authority should employ the monetary policy stance in a pattern that increases money supply in order to boost investment in manufacturing sector which would eventual bring about improved output to Nigeria. Dr. Loretta Anayo Ozuah "Macroeconomic Variables and Manufacturing Sector Output in Nigeria" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-5 | Issue-2 , February 2021, URL: https://www.ijtsrd.com/papers/ijtsrd38420.pdf Paper Url: https://www.ijtsrd.com/management/accounting-and-finance/38420/macroeconomic-variables-and-manufacturing-sector-output-in-nigeria/dr-loretta-anayo-ozuah
The document provides an overview of COMESA (Common Market for Eastern and Southern Africa), including its history, member countries, vision, mission, objectives, programs, and challenges. COMESA was established in 1981 as a preferential trade area and transformed into a common market via treaty in 1993. It currently has 19 member countries in Eastern and Southern Africa and aims to achieve economic integration and raise living standards. Key objectives include sustainable development, cooperation in various fields like trade and investment, and establishing an African Economic Community. Major programs focus on trade liberalization, facilitation, and private sector development. Challenges include differences in geography, history, politics and economies between members that complicate full integration and achievement of COMESA's
The document provides an overview of plant genetic resources in Egypt. It discusses the location and challenges facing Egyptian agriculture. It describes Egypt's efforts to manage plant genetic resources through both in-situ and ex-situ conservation. For ex-situ conservation, it focuses on Egypt's National Genebank, outlining its objectives, departments, facilities, collections, projects, and role in academic research. It also mentions the involvement of other organizations and botanical gardens in conserving plant genetic resources ex-situ in Egypt.
The document discusses the business environment in China by examining the economic, political, and cultural factors that influence business practices. It summarizes that China has a huge potential market but also poses risks due to differences in its political system and culture. The economy has grown significantly through foreign investment and trade, though challenges remain around infrastructure, currency policy, and human rights issues. Understanding these environmental factors is important for foreign businesses operating in China.
Tourism is an important sector for Bangladesh's economy. In 2014, tourism contributed 1.9% of Bangladesh's GDP directly and was expected to grow to 2% of GDP by 2025. Bangladesh earned $158 million from tourism in 2014, and that figure was predicted to rise to $18.4 billion by 2025. International tourist arrivals in Bangladesh were expected to increase from 500,000 in 2014 to 650,000 by 2025. Tourism benefits Bangladesh's economy by creating jobs and income both directly in the tourism industry and indirectly in other related sectors that tourism spending supports.
foreign trade as an engine of economic growthMitikaAnjel
Foreign trade acts as an "engine" of economic growth in three key ways: 1) It enlarges a country's market for exports, leading to greater production and utilization of resources; 2) Expanding exports provides more employment opportunities and economies of scale, lowering costs; 3) Access to global markets encourages innovation as businesses compete with international counterparts, improving efficiency and productivity. For example, the opening of the Suez Canal increased India's exports of commercial crops like cotton and tea, fueling economic growth. Export processing zones also create jobs and incomes, stimulating demand and further domestic manufacturing. Overall, specialization, competition and technological adoption spurred by foreign trade can power economic expansion.
External Trade Benefits and Poverty Reduction in English Speaking West Africa...iosrjce
This research examines the impact of external trade benefits on poverty reduction in five English
Speaking West African Countries (ESWACs) from 1980 to 2013. These countries include; The Gambia, Ghana,
Liberia, Nigeria and Sierra Leone). The study expressed external trade benefits (ETB) as increase in export
earnings (EXE), trade openness (TOP), total government expenditure (TGE) and reduction in foreign exchange
rate (FER), while poverty level is expressed as real gross domestic income (GNI) per capita current US Dollar.
Theoretically, the study relied on five trade theories, in practice; the study constructs a balanced panel data
structure (BPDS) and methodologically, departs from the classical OLS and 1st generation panel econometric
techniques to adopting recently developed 2nd generation panel data econometric methods. The results of the
study reveal that external trade benefits were not found to be significant enough to reduce the poverty level in
ESWACs from 1980 to 2013.This impliesthat external trade benefits did not significantly increase GNI per
capita in ESWACs within the period of study. Based on this result, the study therefore concluded that the impact
of external trade benefits on poverty level is a trivial matter because external trade benefits have not
comprehensively and significantly augmented the status of real gross domestic income (GNI) percapital
currentUSDollar of English speaking West African countries within the period of study. Following this
conclusion we recommended, among others, that policy implication on the result of co-integration of the panel
equation 2 is that more credible expansionary fiscal policy should be pursued as this will help to pump more
money into circulation with the aim of creating and expanding employment opportunities that would be able to
reduce poverty in the region and cut in public investment spending on agriculture and industrial sectors should
be avoided so that the countries will be encouraged to produce locally and also export.
The document summarizes key topics that will be covered in an OCR Economics revision seminar, including the economic recovery in the UK and issues related to globalization. Specifically, it discusses the UK entering a recovery phase in 2013 with GDP growth of 0.6% and 2.4% annually. However, some economists are concerned about long-term unemployment remaining high and the employment rate continuing to fall. The document also reviews global trade trends and debates around regional integration versus globalization.
AS Macro Revision - The Balance of Paymentstutor2u
This document discusses the balance of payments (BoP) and current account. It provides examples of countries that typically run trade surpluses and deficits. Causes of deficits include weak competitiveness and exchange rate issues. Policies to reduce deficits include demand management, exchange rate adjustments, and supply-side reforms. A currency depreciation can initially worsen the trade deficit due to lags but may eventually improve it if certain conditions are met. The UK often runs a trade deficit due to factors like import dependence and weaknesses exporting to growing markets.
This document summarizes a research paper that examines the relationship between trade deficits, foreign direct investment, and economic growth in Rwanda from 2000 to 2015. It finds that trade deficits have a negative long-run impact on economic growth, while foreign direct investment has a positive short-run and long-run impact. The paper uses cointegration and vector error correction models to analyze the data and confirms these relationships statistically. It concludes that Rwanda should continue policies to improve net exports and foreign direct investment to support economic growth.
This is an updated version of a slideshow revision presentation on the way in which different charts are presented in economics exams and some tips for handling the data in your answers.
The document discusses how economic growth and changes in factors of production, technology, and tastes can impact international trade. It examines different types of factor growth, technical progress, and their effects on production possibilities and trade. Growth can lead to increased, decreased, or unchanged trade volumes depending on whether production and consumption effects are pro-trade or anti-trade. In large countries, growth impacts welfare through terms-of-trade and wealth effects, and can potentially cause immiserizing growth under certain conditions. Growth and changes in both trading nations will shift their production possibilities and can influence trade volumes and terms of trade.
This document summarizes a study that investigated the effects of capital goods imports on physical capital formation and economic growth in sub-Saharan Africa countries from 1985 to 2018. The study used data from various sources and employed descriptive statistics, panel Granger causality tests, and panel co-integration as estimation techniques. The results showed that capital goods imports had a positive but small contribution to economic growth and physical capital formation. Panel Granger causality tests also found bi-directional causality between economic growth and capital goods imports, but only uni-directional causality from capital goods imports to physical capital formation. The study concludes that capital goods imports are not large enough to effectively influence growth and capital formation in sub-Saharan Africa,
China has experienced rapid economic growth averaging 10% annually, making it the world's second largest economy. While GDP growth has slowed recently to around 6.5%, the government is taking steps to transition to a more consumption-based economy with a focus on sustainability. Manufacturing dominates China's economy, accounting for over 45% of GDP, while the services sector is growing rapidly and now represents around 44% of GDP. Inequality remains an issue, with the Gini coefficient between 0.47-0.49.
This study investigates specifically the impact of Oil and Non-Oil Products on Nigeria Gross Domestic Product
(GDP). Data were collected for period 1981-2016 Descriptive Statistics and Multiple Linear Regression Approach
was used, defining Oil, and Non-Oil Products as independent variables and Gross Domestic Product (GDP) as
dependent variable. From the analysis, Oil, and Non-Oil Products contributes immensely to the Nigeria Gross
Domestic Product (GDP). Contrary, the Oil Product is positively and insignificant on economic growth of Nigeria
(GDP) and the Non-Oil Product has positively and significant on economic growth of Nigeria (GDP). This study
therefore recommends that Nigeria should enhance her export promotion strategies and diversify her economy far
away from Crude oil.
China has experienced rapid economic growth over the past several decades transitioning from a centralized economy to a more market-based one. This growth was driven initially by cheap exports and foreign investment but China is now focusing on transitioning to a domestic consumer-driven economy. Some challenges for China's future include managing inflation, an aging population, pollution, and sustaining growth of the middle class. Predictions for 2030 see China continuing to be a major global economic force but facing domestic political and economic issues from its development.
This document discusses barriers to greater African participation in global trade and recommendations to address them. It finds that while some African countries have increased exports, many have not due to various barriers. Key recommendations include: 1) Deeper regional economic integration in Africa to create larger markets and exploit economies of scale; 2) Addressing high tariffs and non-tariff barriers African exports face in global markets, particularly for agricultural goods; 3) Improving African infrastructure and production capacity to allow greater processing of exports within Africa rather than just raw materials. Overall, reducing trade barriers both within Africa and faced by African exports globally could significantly boost African economic growth and development.
This document examines whether the Marshall-Lerner condition holds for Kenya's bilateral trade using dynamic panel data analysis. It finds that Kenya has persistent trade surpluses with Uganda, Tanzania, and Netherlands, but large and persistent deficits with China, UAE, India, Germany, and USA. The study applies unit root and cointegration tests to Kenya's bilateral trade data before using mean group estimation. The results indicate that currency devaluation in Kenya would only improve its trade balance according to the Marshall-Lerner condition when considering its bilateral trade with China, UAE, India, and South Africa. The study thus recommends that Kenya should assess currency devaluation decisions on a bilateral rather than aggregate basis.
The document discusses Brazil's economy between 2002 and 2011 based on two figures and an extract.
Figure 1 shows Brazil's GDP per capita increased from $7,800 to $11,700 over this period. Figure 2 shows Brazil's population grew from 176m to 203m. Therefore, Brazil's total GDP increased approximately 53% from $1.78 trillion to $2.73 trillion.
The extract mentions Brazil's currency, the Real, appreciated nearly 40% against other currencies since 2008. This was due to high interest rates attracting speculative capital inflows and increased exports of commodities like soybeans contributing to a current account surplus.
An appreciation could improve Brazil's current account balance in the short-
Globalization has led to both benefits and disadvantages for developing countries. It has encouraged specialization and deeper trade integration, however, it has also contributed to imbalances between and within countries. While globalization has helped lift many people out of extreme poverty, inequality has risen in some places. Overall, reducing inequality through progressive policies could boost aggregate demand and economic growth, but only if tax revenues are spent effectively and social mobility is high enough.
Macroeconomic Variables and Manufacturing Sector Output in Nigeriaijtsrd
Management of macroencomic variables has been noted as instrumental to a well performing manufacturing sector. This study thus examined the effect of macroencomic variables on the manufacturing sector in Nigeria within a liberalised economic era of 1986 to 2018. The Autoregressive Distributive Lag model was employed for data analysis. The results revealed that macroeconomic variables has 93 significant short run policy effect but no significant long run effects on manufacturing sector output in Nigeria. The endogenous dynamics of manufacturing sector previous year outputs exerted a significance influence on the macroeconomic variables long run relationship effect on current year. The explanatory variables suggested that money supply M2 , interest rate INTR and credit to private sector CPS exerted positive effects on manufacturing sector output at short term trends. The study thus posits that macroeconomic variables have varying levels of effects on the manufacturing sectors of Nigerian economy. The monetary authority should employ the monetary policy stance in a pattern that increases money supply in order to boost investment in manufacturing sector which would eventual bring about improved output to Nigeria. Dr. Loretta Anayo Ozuah "Macroeconomic Variables and Manufacturing Sector Output in Nigeria" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-5 | Issue-2 , February 2021, URL: https://www.ijtsrd.com/papers/ijtsrd38420.pdf Paper Url: https://www.ijtsrd.com/management/accounting-and-finance/38420/macroeconomic-variables-and-manufacturing-sector-output-in-nigeria/dr-loretta-anayo-ozuah
The document provides an overview of COMESA (Common Market for Eastern and Southern Africa), including its history, member countries, vision, mission, objectives, programs, and challenges. COMESA was established in 1981 as a preferential trade area and transformed into a common market via treaty in 1993. It currently has 19 member countries in Eastern and Southern Africa and aims to achieve economic integration and raise living standards. Key objectives include sustainable development, cooperation in various fields like trade and investment, and establishing an African Economic Community. Major programs focus on trade liberalization, facilitation, and private sector development. Challenges include differences in geography, history, politics and economies between members that complicate full integration and achievement of COMESA's
The document provides an overview of plant genetic resources in Egypt. It discusses the location and challenges facing Egyptian agriculture. It describes Egypt's efforts to manage plant genetic resources through both in-situ and ex-situ conservation. For ex-situ conservation, it focuses on Egypt's National Genebank, outlining its objectives, departments, facilities, collections, projects, and role in academic research. It also mentions the involvement of other organizations and botanical gardens in conserving plant genetic resources ex-situ in Egypt.
This document provides an executive summary and overview of the Egyptian economy and stock market. It discusses the global economic slowdown, impact of the Egyptian currency devaluation, and performance of the Egyptian stock market index in 2015. It identifies real estate, banking, power and contracting, and food and beverages as preferred sectors. The summary also notes that regaining investor confidence through reforms will be key to economic recovery. Security selection is emphasized as important given challenges in the Egyptian market.
COMMON MARKET FOR EASTERN AND SOUTHERN AFRICA Experience of comesa in intra r...Parti Djibouti
The document outlines the history and development of regional economic integration efforts in Eastern and Southern Africa, culminating in the establishment of the Common Market for Eastern and Southern Africa (COMESA) in 1993. It notes that COMESA was established to promote cooperation and integration across various economic sectors through reducing barriers to trade and investment. Over time, COMESA aims to establish a fully integrated regional economic community with free movement of goods, services, capital and labor by 2018, and a future political union.
Kenya is located in East Africa and has a diverse landscape and population. The document provides an overview of Kenyan society, culture, history and business practices. It discusses the country's ethnic groups including the Kikuyu, Luhya and Maasai tribes. Business meetings in Kenya are informal and value building relationships over rigid schedules. Greetings typically involve handshakes and exchanging business cards with two hands.
The Kenyan Economy: Perceptions and RealitiesIpsos
In this release, we present several findings related to the economy.
Underpinning the specific findings is the general reality that three-quarters of all Kenyan households (75%) report a total family income of Shs. 25,000 or less, with more than half of these households (44%) earning between nothing and only Shs. 10,000 (a figure which increases to 46% if those who declined/were unable to answer this question are excluded). In addition, as is seen in several of the specific findings show below, such extensive poverty takes a clear regional dimension. For example, the proportion of those in the Shs. 10,000 and below category is 56% at the Coast compared to 56% in Nairobi, more than twice.
At the same time, these income-group findings over all three Ipsos surveys since May, 2014 show no statistical change, reflecting both the static nature of income-distribution in Kenya, and the reliability of Ipsos’ survey methodology.
Impact of openness, foreign direct investment, gross capital formation on eco...Alexander Decker
This document summarizes a study that assessed the impact of openness, foreign direct investment, and gross capital formation on economic growth in Kenya from 1960 to 2010. A multiple linear regression model was used to analyze data from the World Bank. The findings showed that trade openness had a positive and significant impact on GDP growth. However, foreign direct investment and gross capital formation did not have a significant effect on GDP growth. The study recommends that policymakers in Kenya emphasize increasing trade openness to promote economic growth.
5.[34 42]effect of foreign direct investment and stock market development on ...Alexander Decker
This study investigates the impact of foreign direct investment (FDI) and stock market development on economic growth in Nigeria from 1980 to 2009. The study employs econometric techniques including unit root tests, cointegration, and error correction modeling. The results show that both FDI and lagged stock market development have a small but statistically significant positive effect on economic growth in Nigeria. Lagged exchange rates also have a positive impact on growth. These findings suggest that FDI, stock market development, and exchange rate appreciation can enhance economic growth in Nigeria.
11.effect of foreign direct investment and stock market development on econom...Alexander Decker
This study investigates the impact of foreign direct investment (FDI) and stock market development on economic growth in Nigeria from 1980 to 2009. The study employs econometric techniques including unit root tests, cointegration, and error correction modeling. The results show that both FDI and lagged stock market development have a small but statistically significant positive effect on economic growth in Nigeria. Lagged exchange rates also have a positive impact on growth. These findings suggest that FDI, stock market development, and exchange rate appreciation can enhance economic growth in Nigeria.
5.[34 42]effect of foreign direct investment and stock market development on ...Alexander Decker
This study investigates the impact of foreign direct investment (FDI) and stock market development on economic growth in Nigeria from 1980 to 2009. It finds that both FDI and lagged stock market development have a small but statistically significant positive effect on economic growth. The results support the argument that extractive FDI and stock market development enhance growth. However, both FDI and stock market development show cyclical movements over time. Lagged exchange rate appreciation is also found to positively impact growth in Nigeria. The study aims to fill a gap by examining the joint impact of FDI and stock market development on growth, which has not been the focus of prior research on Nigeria.
This document summarizes a research paper that analyzes the effects of international trade on economic growth in China. It begins with an overview of China's rapid economic growth and integration into the global economy. It then reviews literature showing that international trade can positively impact productivity and growth. The paper aims to examine these effects in China through econometric and non-parametric analysis of panel data from 2002-2007. It finds that increasing trade volume and high-tech exports led to productivity gains across Chinese regions, with eastern regions developing most due to greater trade participation.
Gross domisitic investment growth effeects on growth of some micro and macro ...Alexander Decker
1) The document investigates the effect of gross domestic investment (GDI) growth on the growth of micro and macroeconomic variables in Jordan from 1987-2012.
2) It uses quantitative econometric methods, including OLS regression, Tobit regression, and Prais-Winston analysis to analyze the relationship between GDI growth and GDP growth, inflation, exchange rate, labor force, and economic policy stability.
3) The results find proportional relationships between GDI growth and GDP growth and labor force growth, and inverse relationships between GDI growth and exchange rate changes and stability of economic policies.
The document discusses the potential impacts of de-globalization trends on East Asian economies. It finds that world trade, foreign direct investment, and intra-East Asian trade have significantly contributed to East Asian income per capita and GDP growth based on regression analyses. It concludes that East Asian countries should boost intra-regional trade through agreements like RCEP to compensate for possible stagnation in world trade and maintain economic integration and welfare as de-globalization progresses.
Trade Liberalization and Economic Growth in China Since 1980iosrjce
The aim of this study is to explore the causality relationship between the foreign trade and economic
growth of Chinese economy using time series data running from 1980 to 2013.Co integration, Granger
Causality analysis and Vector Error Correction Mechanism (VECM) has been used in order to test the
hypotheses about the presence of causality and co integration between the two variables. The co integration test
confirmed that foreign trade and GDP are co integrated, indicating an existence of long run equilibrium
relationship between the two as confirmed by the Johansen co integration test results. The Granger causality
test finally confirmed the presence of bi-directional causality.
This study investigates specifically the effect of Imports and Exports on Balance of Foreign Trade in Nigeria (GDP). Data were collected for period 2007 – 2016. Multiple Regressions Approach and Correlation Analysis was used, defining Imports, Exports and Openness as independent variables and Gross Domestic Product (GDP) as dependent variable. From the analysis, Imports, Exports and Openness contributes immensely to the Nigeria Gross Domestic Product (GDP). Contrary, Imports is positively and significant on Balance of Foreign Trade in Nigeria (GDP), Exports has positively and insignificant on Balance of Foreign Trade in Nigeria (GDP) and Openness has positively and insignificant on Balance of Foreign Trade in Nigeria (GDP). Also, there is a perfect positive association on gross domestic product between imports on the balance of foreign trade in Nigeria and it is significant, with a perfect positive association on gross domestic product and imports between exports on the balance of foreign trade in Nigeria and it is significant and there is a negative moderate association on gross domestic product, imports and exports between openness on the balance of foreign trade in Nigeria and it is insignificant. This study therefore recommends that Nigeria should enhance her Imports & Exports promotion strategies and expanding the Import sector for easy importation.
Effect of foreign direct investment and stock market development on economic ...Alexander Decker
This document analyzes the effect of foreign direct investment and stock market development on economic
growth in Nigeria from 1980 to 2009. It finds that both foreign direct investment and lagged stock market
development have a small but statistically significant positive effect on economic growth. The trends show
that foreign direct investment and stock market development experience cyclical movements. Lagged
exchange rate appreciation also enhances economic growth in Nigeria. The study aims to examine trends in
foreign investment and stock markets, and establish their relationship to economic growth, in order to guide
policymakers.
11.effect of foreign direct investment and stock market development on econom...Alexander Decker
This study investigates the impact of foreign direct investment (FDI) and stock market development on economic growth in Nigeria from 1980 to 2009. It employs techniques such as unit root testing, cointegration, and error correction modeling. The results show that both lagged FDI and lagged stock market development, as measured by market capitalization as a percentage of GDP, have a small but statistically significant positive effect on economic growth. Trend results indicate that FDI and stock market development experience cyclical movements. Lagged exchange rate is also found to have a positive impact on growth, suggesting that exchange rate appreciation enhances growth in Nigeria. The findings suggest more investment is needed in these markets to boost economic growth.
The Relation Between Exports of Main Products And Economic Growth of Key Econ...inventionjournals
This paper clarifies the literature of key product export growth and regional economic growth. The paper analyses impacts of key product export on regional economic growth and vice versa. The paper provides recent empirical evidence of the relation. Besides an evaluation of the recent relation between export growth and economic growth in Viet Nam, the paper assesses the relation between key product export and economic growth during 1996-2012 period based on quantitative and qualitative approaches. With constructed models, the paper examines the relation between key product export and economic growth and concludes that it is positive. The research findings show that key product export in every economic region contributes positively to regional economic growth although it varies in different regions. Based on existing literature and empirical analysis, the paper provides a number of strategies to improve key product export contribution to key economic regions in the most effective manner and vice versa. The paper creates a fundament for researchers and policy makers both regionally and nationally in order for developing effective orientations, policies and measures for promoting export and sustainable eoconomic development.
New Evidence on the Determinants of Foreign Direct Investments in Emerging Ma...ijtsrd
The main goal of the current study is to investigate how conventional and institutional factors affect foreign direct investment in particular global emerging markets. The study specifically seeks to determine the impact of GDP Growth, Population Growth, Level of Inflation, Trade Openness, Voice and Accountability, Rule of Law, Control of Corruption, Political Stability, and Government Effectiveness which are institutional determinants on FDI Inflows towards the Global Emerging Markets. To approach the research question a panel regression analysis has been applied by leveraging annual data from 18 countries, namely Angola, Brazil, Chile, China, Colombia, Egypt, Ghana, India, Indonesia, Malaysia, Mexico, Nigeria, Peru, Philippines, Singapore, South Africa, South Korea and Vietnam. Findings show that inflation and GDP have a significant and positive effect on the FDI inflows, while Voice and Accountability is significant but negative towards the examined variable. Manolis I. Skouloudakis "New Evidence on the Determinants of Foreign Direct Investments in Emerging Markets: A Panel Data Approach" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-7 | Issue-2 , April 2023, URL: https://www.ijtsrd.com.com/papers/ijtsrd56212.pdf Paper URL: https://www.ijtsrd.com.com/economics/international-economics/56212/new-evidence-on-the-determinants-of-foreign-direct-investments-in-emerging-markets-a-panel-data-approach/manolis-i-skouloudakis
EFFECTS OF FOREIGN TRADE ON AGRICULTURAL OUTPUT IN NIGERIA (1981-2018) IAEME Publication
The current study examined the impact of foreign trade on agricultural output in
Nigeria based on data sourced from 1981 to 2018 by employing a number of
estimation techniques such as Cobb-Douglas, unit root testing, autoregressive
distributed lag among others within the context of two profound theories of exchange
rate - the vent – for surplus theory of international trade; factor endowments theory.
Our study observed that foreign trade exerts negatively on agricultural output. Our
results have some empirical implications.
Nigeria and Global Competitiveness: Imperative for International Trade a Comp...inventionjournals
This study is aimed at examining the level of Nigeria’s global competitiveness in relation to some selected economies in Africa and to establish the links between international trade and global competitiveness. In conducting the study secondary data were sourced from the Africa Competitiveness report 2015 and the Global Competitiveness report 2014- 2015 as point of reference and in providing the data necessary for the analysis. Descriptive statistics was used in analyzing the data provided by the insight reports while comparison was made with six African oil exporting countries. Findings showed that Nigeria is having a weak performance in almost all the factors considered with a very dismal performance in its institutions, health and primary education and infrastructure to change this position to a positive one, the Nigeria economy should be transformed by diversifying the economy from crude oil dependence to a multi sector driven economy.
Remittance inflow and economic growth the case of georgiaAzer Dilanchiev
Abstract:
Remittance inflow become one of the main source of capital flows in the world. It is noted that remittance is
very effective in promoting household welfare and as an alternative source of capital inflow. However in it
uncertain whether or not it leads to economic growth. This article examines the effects of remittances inflow
on economic growth in Georgian republic. The impact of remittance inflow on GDP growth was analyzed and
tested by Unit Root Test, Johansen Co-integration and VAR Granger Causality/Block Exogeneity Wald Tests.
In the paper the quarterly data interval from the first quarter of 1999 to third quarter of 2015 was used. As a
result it was found out that that there is a nexus between remittance and GDP and it is concluded that
remittance leads to increase in GDP growth.
11.exchange rate and macroeconomic aggregates in nigeriaAlexander Decker
This document summarizes a study that analyzes the impact of exchange rates on macroeconomic aggregates in Nigeria from 1970 to 2009. It uses simultaneous equation models and vector-autoregressive models to examine the relationship between real exchange rates and GDP growth. The results show no strong direct relationship between exchange rate changes and GDP growth. Rather, Nigeria's economic growth has been directly affected by fiscal and monetary policies and exports. Exchange rate overvaluation has been unfavorable for growth. The conclusion is that exchange rate management improvements are necessary but not sufficient to revive the Nigerian economy and broader economic reforms are required.
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Women with polycystic ovary syndrome (PCOS) have elevated levels of hormones like luteinizing hormone and testosterone, as well as higher levels of insulin and insulin resistance compared to healthy women. They also have increased levels of inflammatory markers like C-reactive protein, interleukin-6, and leptin. This study found these abnormalities in the hormones and inflammatory cytokines of women with PCOS ages 23-40, indicating that hormone imbalances associated with insulin resistance and elevated inflammatory markers may worsen infertility in women with PCOS.
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Benefits:
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Effect of international trade on economic growth in kenya
1. European Journal of Business and Management www.iiste.org
ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol.5, No.10, 2013
131
Effect of International Trade on Economic Growth In Kenya
Neddy Soi1*
, Irene Koskei1
, Kibet Buigut2
and John Kibet3
1. School of Business and Economics, Moi University, PO Box 3900- 30100 Eldoret, Kenya
2. School of Business and Management, University of Eldoret, PO Box 1125 - 30100, Eldoret, Kenya
3. Iowa State University, College of Agriculture and Life Sciences 138 Curtiss Hall, Ames, IA 50011-1050
* E-mail of the corresponding author: neddysoi@gmail.com
Abstract
The general objective of this study was to assess the impact of international trade on economic growth in Kenya with
the years under consideration being 1960 to 2010. There are many components of international trade that effect
economic growth, but this paper examined the effect of exchange rate, inflation and final government consumption
on Kenyan economic growth. World Bank data for these variables were analyzed in order to achieve the desired
objectives. A multiple linear regression model, Barro growth model, was used to estimate the existing the
relationship between variables then ordinary least square method was applied. From the findings, Exchange rate has
no effect on GDP growth rate, while inflations had negative and significant effect on GDP growth rate. Final
government consumption had positive effect on GDP growth rate in Kenya. This study recommended the policy
makers to emphasize on policies promoting exports, maintaining low and stable inflation rates and encourage
government expenditure on development projects so as to encourage economic growth in Kenya.
Keywords: International Trade, Economic Growth, Exchange Rate, Gross Capital Formation, Inflation
Introduction
The relationship between international trade and economic growth has received significant attention in literature
(Andersen 2008 and Ulasan 2012). International trade, as a major factor of openness, has made an increasingly
significant contribution to economic growth (Sun and Heshmati, 2010). Schneider (2004) argues that imports bring
additional competition and variety to domestic markets, benefiting consumers, and exports enlarge markets for
domestic production, benefiting businesses. International trade exposes domestic firms to the best practices of
foreign firms and to the demands of discerning customers, encouraging greater efficiency. Trade gives firms access
to improved capital inputs such as machine tools, boosting productivity and providing new opportunities for growth
for developing countries. It thus, difficult to understate economic growth and development. However, some models
such as endogenous growth models (Schneider, 2004) have tried to link different channels of international trade with
economic growth.
Compared with other selected African and Asian countries, Kenya’s share in international trade is insignificant.
According to Kenya Institution of Public Policy and research (KIPPRA, 2009) Kenyan share in world export only
contribute 0.03 per cent in 2006 compared with Malaysia (1.33%), South Korea (2.69%), Singapore (2.25%) and
Thailand (1.08%). World prices of agricultural raw materials and vegetable oils have either remained stagnant or
have been declining over the years. Kenya’s main exports are in this category and this means that to reap from the
benefits of international trade the country needs to diversify into more value added manufactured exports (World
Bank, 2008 as cited in KIPPRA, 2009). One of the most important objectives of structural adjustment policies has
been to implement reforms on international trade policy due to its importance in economic development (Rono,
2002).
Problem formulation
The importance of international trade on economic growth has awakened interest over the years to both policy
makers and economists alike. Although theoretical links between trade and economic growth have been extensively
discussed for over two centuries, a lot of controversies still abound concerning their real effects (Obadan & Elizabeth
2007). The important ingredients and major components of international trade are Imports and exports. Import of
capital goods is vital to economic growth. Imported capital goods affect investment directly. This consequently
constitutes the engine of economic expansion. Exports on the other hand contribute greatly to GDP. Quite a number
of countries have achieved growth through an export–led strategy. Most studies as regards this subject have been
done in developed countries and few in the third world countries. International trade has always been a “catalyst of
growth” for global economy. In contrast, some economists are against this idea in that they believe only developed
2. European Journal of Business and Management www.iiste.org
ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol.5, No.10, 2013
132
countries benefit from international trade at the expense of developing economies. This paper sought to fill in this
gap by establishing the impact of impact of macroeconomic variables on Kenya’s economic growth, which is still in
a transitory phase. The following hypotheses were tested;
Ho1: Exchange Rate has no significant effect on economic growth
Ho2: final government consumptions has no significant effect on economic growth
Ho2: inflation has no significant effect on economic growth
Previous empirical studies on international trade and economic growth
The OECD (2003) conducted a study on the impact that trade had on the average income per population. According
to the result, the elasticity of international trade was 0.2, which was statistically significant
Jackson (2006) in his analysis of trade of trade agreements on economic growth in United States of America (USA)
concludes that nations pursue trade liberalization to achieve a number of national objectives. In addition to the
“static” gains from trade, he suggests that trade potentially plays a dynamic role in the economy
Singh (2011) supports the positive impact of international trade on economic growth theory as evidenced by earlier
studies. He finds an affirmative and significant long-run effect of exports and investment on output in Australia. The
evidence supporting the positive and significant long-run effects overwhelms the evidence providing mixed effects
of trade (and investment) on output
It is widely accepted that the level of international trade in an economy may be one of the main sources of its growth
(Gurgul & Lach 2010). In their study, they concluded that Exports positively affected economic growth in the Polish
economy. In addition, the dynamic interactions between exports and imports influenced the GDP.
Sun and Heshmati (2010) concluded that China’s outstanding performance in economic growth could be traced back
to its increasing involvement in global trade and dynamic trade policy. This rapid economic growth has made the
country target the world as its market. The increasing participation in the global market helps China reap the static
and dynamic benefits from trade, facilitating the rapid national economic growth.
Data and Methodology.
This paper applied an explanatory design which was appropriate to aid this paper in providing an explanation on the
relationship that existed between international trade and economic growth in Kenya. Data for the study was obtained
from World Bank from year 1960 to year 2010. These years were preferred since they represent the periods in which
Kenya underwent many transformations such as Structural Adjustment Programs, political liberalization etc, which
may have impact on GDP.
Measurement of Variables
Table 1 Variable, Their Symbols and Their Measurements
Variables Symbols Measurement
Economic growth GDP Real GDP per capita
Government Expenditure GXP Government consumption
Inflation INF Consumer Price Index
Model
This paper examined the impact of international trade on economic growth in Kenya using a model consistent with
Barro (1990, 1995). This model has been used in earlier studies by Edwards (1998) Obadan (2008) and Obadan and
Elizabeth (2010) though with some modifications. Barro growth model is expressed as follows:
… … … … . 1
Where;
Growth rate of gross domestic product
Denotes a set of independent variables
3. European Journal of Business and Management www.iiste.org
ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
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133
Denotes conditional variables
Error term
Obadan and Elizabeth (2010) adopted this model and presented it in the form:
! " #$% &'(!) * + , +- . / 0 … … … … 2
Where:
! denotes Growth rate of gross domestic product
$% The degree of trade openness
'(!) Exchange rate
+ Foreign direct investment
+- – Domestic investment
/ – Political Stability
0 – Error term
This study modified a Barro growth model and was thus expressed in the form:
! " #'(!) &+- * 0 … … … … 3
Where:
! Denotes Growth rate of gross domestic product
'(!) Exchange rate
+- Inflation
Government Consumption
t denotes the time period that is t = 1, 2,…..T
εt denotes the white noise error, β0 is the constant term while the other β’s are the coefficients of
the independent variables.
4. European Journal of Business and Management www.iiste.org
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Empirical Analysis and Results
Table 2: Descriptive Statistics
Variable Obs Mean Std. Dev. Min Max
GDPGR 50 1.278 4.569 -10.598 17.929
EXCH 51 31.622 28.887 7.02 79.233
Inflation 50 10.625 8.786 -0.172 45.979
GC 49 1.29 1.07 8.67 4.62
Where GDPGR denotes GDP growth rate, EXCH denotes Exchange rate, GC denotes final government
consumption and Obs is the number of observations.
Results in table 1, the GDP growth rate for Kenya averagely 1.3% for a period of 50 years. With the period ranging
from 1960 to 2010, the highest GDP growth rate was17.9% and a lowest GDP growth rate was -10.6%. The
official exchange rate was showed to be averagely 31.6% for a period of 5o years with the least exchange rate
recorded to be 7.02%, while the highest was 79.233%. For the period under study inflation had a mean of 10.62545
with a standard deviation of 8.786389. It had 50 observations out of which the lowest value was -0.17 and the highest
value was 46. Finally, final government consumption had a mean of 1.290 with a standard deviation of 1.070. Out of
the 49 observations, the minimum value of the final government consumption was 8.670 and a maximum value of
4.620.
Table 3: Correlation Results
Exchange Rate Inflation
Final Government
Consumption
Exchange Rate 1
Inflation -0.3937 1
Final Government
Consumption 0.8186 -0.2411 1
The test result for Multicollinearity using the Correlation Matrix as shown in table 3. The
correlation matrix shows the implied relationships between the individual explanatory variables.
From the correlation matrix results, it is evident that Exchange rate and inflation had correlation
of less than 0.8 amongst themselves implying that there is no severe multicollinearity. However,
the correlation between exchange rate and final government consumption was greater than 0.8
implying that severe multicollinearity exists.
5. European Journal of Business and Management www.iiste.org
ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
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Table 4: Regression Results
N= 32
Variable Coefficient
Robust
Std. Err. t P
95% Conf. Lower &
Upper Interval
Exchange rate 0.019 0.09 0.21 0.837 -0.168 0.205
Inflation -0.085 0.043 -1.96 0.042 -0.175 0.005
final government
consumption 4.12 1.79 2.3 0.03 4.23 7.82
Constant 1.091 0.856 1.27 0.215 -0.677 2.858
R-squared 0.4865
Root MSE 1.9569
ANOVA F (7, 24) 13.65
Prob > F 0
Table 5: above presents the OLS regression result where the F statistic is 13.65 with a P value of
0.0000 which is a measure of goodness of fit imply that exchange rate, inflation and final
government consumption can significantly predicts GDP growth rate. The R squared is 0.4865
and a root mean standard error of 1.9569 imply that 48.65 percent of the variations in the GDP
growth rate is explained by the joint contribution of exchange rate, foreign final government
consumption and inflation.
Hypothesis Testing
Hypothesis 1 states that Exchange Rate has no significant effect on economic growth. Results
from table 5 indicated that exchange rate recorded a coefficient of 0.019, with p value =
0.837>0.05, this implies that hypothesis was accepted. Exchange rate has no effect on GDP
growth rate in Kenya.
Hypothesis 2 stipulates that inflation has no significant effect on economic growth. Table 5
reported that inflation had coefficient of -0.085 with p value of 0.042<0.05, suggesting that
hypothesis 2 is rejected, this imply that, in Kenya inflations had negative and significant effect on
GDP growth rate suggesting that increase of inflation with one unit leads to decrease of GDP
with 0.085 units
Hypothesis 3 states that final government consumption has no significant effect on economic
growth. From table 5, the coefficient of final government consumption was 4.12 with p value =
0.03<0.05. This showed that hypothesis 3 was rejected inferring that final government
consumption had positive effect on GDP growth rate in Kenya. Thus, increasing final
government consumption with one units yield 4.12 units to GDP.
Discussion of Findings
The general objective of this paper was to assess the impact of international trade on economic
growth in Kenya with the years under consideration being 1960 to 2010. The specific objectives
were to evaluate the impact of exchange rate, inflation and final government consumption
integration on the growth of the Kenyan economy.
Exchange rate had no significant effect on GDP growth rate. This could be explained by the fact
that the exchange rate for Kenya doesn’t fulfill the Marshall-Leaner condition while the foreign
direct investment could be explained by the negative impact of dumping activities of foreign
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direct investors, coupled with their perhaps unpatriotic and exploitative modus operandi in
Kenya. Both exchange rate and foreign direct investments have unexpected signs. Though the
coefficient of the gross capital formation has the expected sign, it is statistically insignificant.
This could be explained by the fact that capital formation requires an enabling business
environment, for example, well developed infrastructure, low or no corruption, low interest rates,
political stability among others. Unfortunately Kenya performs very poorly, for example, for the
period ranging from 1996 to 2008 the political stability index averaged at -1.052 (African
Development Indicators, 2011). These findings contradicts that of Obadan and Elizabeth in
Nigeria where exchange rate had coefficient of 7.76, the study findings however, coincide with
that of Gertz (2009) and Mohan et al (2007) who found exchange rates coefficients of 0.042 on
their studies done in Kenya.
Empirical evidence indicated that inflation affect GDP growth rate negatively contradicting Boyd
et al (2001) findings that increases in inflation will have no additional consequences for the
financial sector performance or economic growth. The findings support Sarel (1996) findings that
if the existence of the structural break is ignored, the estimated affect of higher rates of inflation
on economic growth decreases by a factor of three. Baro (1999) in his study in Chile found that
inflation negatively affected the economic growth
Finally, the findings revealed that final government consumption had positive effect on GDP
growth rate.
Conclusion, Recommendation and Possible Future Research
This study studied the hypothesis that exchange rate, inflation, and final government
consumption. High inflation levels lags behind the growth of an economy in that it leads to high
interest rates hence discouraging borrowing which eventually discourages investment.
Government consumption especially on development projects for example setting up
infrastructure encourages growth by creating an enabling environment for trade purposes.
Maintenance of a stable macroeconomic environment should be ensured i.e. maintain stable and
low inflation in the country to boost economic growth. Low inflation leads to lower interest rate
hence encouraging borrowing and ultimately increasing investments. Investments are a major
ingredient of growth in Gross Domestic Product (GDP).
Encouragement of government consumption especially on development projects as opposed to
the recurrent expenditure should be emphasized. Allocation of more funds for development will
increase efficiency and increase the ease of doing business resulting to increased economic
growth rate. For instance, the development of transport network which will smoothen the
movement of goods and services across borders.
Many other ways to evaluate the effect of international trade on economic growth exist such as
the gravity model approach and causality model approach. For instance, the causality approach
could give the direction of causality that exists between the variables. These models could be
applied by researchers in further studies on the impact of Kenya’s international trade on
economic growth.
7. European Journal of Business and Management www.iiste.org
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Vol.5, No.10, 2013
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