Questions On Granger Causality Test Table 3

Foreign demand for a primary product may also limit economic growth as demand for a particular commodity will cause an increase in demand for a country’s currency, thus resulting in the appreciation of the currency. This would reduce the competitiveness of the country’s manufactured exports, thus leading to a decrease in the financial resources gained from exports which could have enabled the country to raise the level of economic welfare to encourage development.

Trade policy in developing countries obtained major influence from the changing views in economic development, namely, inward looking and outward looking (Moon, 1998). For about 3 decades after World War II (WWII), the trade policy of developing countries relies on inward-looking development. This type of development is implemented through autarky trade policies to protect country’s local manufacture industry. There are so many critics delivered during the inward looking development implementation. Then, around eighties, most of developing countries started to change its trade policies in to more outward-looking policy. Those two policies conflicts each other’s. One emphasizes the importance of the principle of comparative advantage, campaigning free market and export oriented policies, while the other highlights to foster domestic market through Import Substitution Industrialisation (ISI).

The country is a producer and exporter of different products such as raw timber and rubber. Most of the manufacturing is owned by foreigners. The new president, Johnson Sirleaf has taken steps to reduce the corruption that is in the country. He have also taken steps to encourage private investments and tried to build support from private investors. The countries have lifted embargos on diamond and timber exports.

Chenery and Strout (1994) asserted that for a long time, there was hardly any country which exhibited sustained growth rate higher than its growth of exports. They also claim that growth rates of individual developing countries since 1950 correlate better with their export performance than with any other single economic indicator. Thirlwall (1997) in his work, explained the possibility that export growth may set up a vicious cycle of growth such that once a country is launched on the path, it maintains its competitive position in world trade and performs continually better relative to other countries. He also contended that export growth relieves a country of balance of payments constraints so that the faster exports grow, the faster output growth can be without running into balance of payments difficulties. His findings suggest that an export based strategy of development offers the best prospects for economic growth. 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. The arguments in favour of trade can be traced to the classical school of economic thought that started with Adam Smith (Medina–Smith, 2001). Since then, the justification for free trade

Some of the countries with surplus commodities may dumb them on international markets at a low price. Under such conditions, some of the efficient industries can might find difficulties in competing for long period. Furthermore, countries whose economies are mostly rural will face unfavourable terms of trade. For example, ration of export prices to import prices. Which means that their export income is more smaller than their import payments the make for high value added imports, as it leads to subsequently large foreign debt levels.

The regression results of a study on the determinants of the Kenyan exports by Orindi (2010) indicated that explanatory variables namely, the importer’s GDP and population provided most of the explanatory power in the regression. The coefficients of these variables had positive signs consistent with the theoretical expectations. The positive coefficient for the importer’s GDP is due to the fact that as income levels of the importing country increases, so does the country’s demand for imports. The Kenya’s GDP and population were found to be insignificant in the model and hence the two variables were dropped out of the regression model. The distance variable was found to be significant at 5% and had negative sign as was expected. In this study, the distance had been factored in as the proxy for the transportation costs. The distance in this case had inverse relationship with exports. This implied that the further away from the Nairobi the importing country is located the higher the transportation costs. High transportation costs have negative effects on the exports. However the author did not take into consideration of the fact that there are countries which are nearer to Kenya and yet exports to these countries from Kenya are less than countries that are far away from Kenya. This implies that the level of trade between countries that have close proximity will be influenced by other factors such as; income, trade agreements, and similar

This report discusses international trade for the country of Rodamia. The report talks about advantages and limitations of trade, and also comparative and absolute advantage. The report also discusses influences that affect foreign exchange rates.

International Trade helps boost development and also reduces poverty by generating growth through increased commercial opportunities and investment, as well as broadening the productive base through private sector development. it also enhances competitiveness by helping developing countries reduce the cost of inputs, acquire finance through investments, increase the value added of their products and move up the global value chain.

Belize is a private sector led small economy that is highly dependent on external trade and vulnerable to internal and external shocks arising from its macroeconomic and trade policies . Belize trade profile shows that about 61.6 percent of its exports are on agricultural products while imports and exports to Gross Domestic Product (GDP) ratios are 72.4 and

In the 1970’s and 1980’s trade openness and economics reform towards market mechanism flourished in many developing countries. This trend is much different as compared to those in the early 1950’s and 1960’s when many less developed countries favored protection policy, inward orientation, and import substitution. As a result of this change, there are substantial developments in world economy after applying outward orientation. According to Thilrwall (2011 p. 514), the implementation of trade openness has managed world output trade relative to world output gain a considerable growth in the period of 1960-2006. The volume of world trade has risen 25 times or nearly 8 percent per annum (at annual compound rate). In the meantime

Since 1992, Mozambique has been with higher level of imports taking the country to trade deficit. The increase in imports is fuelled by increase consumption of goods and services, and in 2013 expanded to 84.007 %. The increase of imports takes the trade and current account to deficit.

Within the wider national context, the analysis of the trade deficit has multiple applications. For instance, it allows policy makers to assess the size of imports and exports and to develop and implement policies that support national interests. Within the increasingly globalized market place, the countries are

This paper sought to evaluate the concept of Trade Liberalization and Development in Nigeria especially from 1999 to 2010. It was discovered that Trade liberalization theory is a branch of international trade as popularized by Adam Smith, which promotes free trade between states. It stipulates that free trade will lead to an increase the wealth on nations. The purpose of the paper is to investigate the role of trade liberalization in the economic development of Nigeria. The study was carried out using the world systems theory, which believes that there is a world economic system in which some countries benefit while others are exploited. Secondary sources of data were used in the study. Our findings however reveal that trade liberalization quite contrary to what its proponents have postulated has not resulted to any economic growth in Nigeria. From the data we have presented it has been shown that Nigerian economy was doing relatively well in the 1960s, but started declining when she started opening up her economy to the outside world buying all manners of goods from the

Staring from this general perception of economists on liberalization of trade, the purpose of this article is to put more thoughts on “The Importance of Trade in Stimulating the Economies of Developing Nations”

As part of these theories appears arises that relationship between trade openness and economic growth is positive. These theories between trade openness and economic growth can be located more than 200 years, with the mercantilist theories. Under these concepts, International trade benefited a nation