The Impact of Trade Openness on Economic Growth: The Case of Ukraine
S. Tkalenko; A. Duka; N. Sukurova; L. Kudyrko; N. Litvin
The first quarter of the XXIst century is characterized by globalization and liberalization trends. For the development of mankind, they are manifested in change, economic, civic and political structures. Today, due to these trends, the economies of the world unite and form a single economic, information space on a global (planetary) scale. Globalization and liberalization are integral attributes of modern development. They help to remove barriers to trade, communication, capital movements, and so on. This is already an objective reality that is difficult to assess and improve; it is an objective process that is conditioned by the development of new types of products, new technologies, means of communication, transport, information, etc. And just in such modern conditions of world economic development countries become more and more open to mutual exchange, and become more and more dependent on each other. Therefore, in terms of economic growth the questions of influence of openness of economy of our state taking into account world globalization tendencies on economic growth remain actual. This topical research, based on empirical modeling, provides a further conception about the assessment of variables in the constructed model and in the time of Granger’s causal relationships in foreign trade openness and economic growth. It is proved that exports have the greatest impact on economic growth. Outpacing of growth rate of imports of goods and services over exports leads to an increase of negative balance of foreign trade, as well as a faster growth of imports of goods and services than exports. The growth of the share of imports in relation to GDP is a negative factor, exacerbated by the imbalance compared to the share of exports in GDP and causes an increase of the share of negative trade balance to GDP. Domestic loans of the financial sector are of great importance for economic growth in current terms of national economic development. Thus, the openness of the economy is directly related with economic growth.
Keywords: Open economy; Foreign trade; Real GDP; Domestic credit; Empirical modeling; Globalization; Liberalization.