The study examined the general impact of trade on economic growth in the Gambia from 1965 to 2016. Accordingly we have done three analyses in order to get appropriate answers to our research problems. We performed some econometric methods such as Augmented Dickey Fuller test, Johansen co-integration test and vector error correction model. The findings of the stationery test shows the present of unit root. The OLS regression results shows that import, interest rate, real effective exchange rate, and inflation are positively correlated with GDP, while export is negatively correlated with GDP.
The result shows that GDP lag, import, and real effective exchange rate can not influence economic growth while export, interest rate, and inflation can highly influence economic growth of the Gambia, even though export negatively influence economic of the Gambia. This positive relationship suggests that the economy of the Gambia can potentially be expanded by means of trade, while the negative relationship means that it has no bearing on the economic growth of the Gambia, From the overall analysis, it is revealed that the variables included in the model have a 50% influence on economic growth while the remaining 50% constitute variables not included in the model.
This implies that (a) Trade has an impact on economic growth of the Gambia. (b) Trade is a robust determinant of economic growth in the Gambia even though that there is still room for research on the impact of trade on economic growth in the Gambia. (c) The effect of trade and extent of the market on growth is a recurring issue in the world of economics. This study recommends that if the Gambia economic growth is to be increased, then policymakers should came up with strategies that encourage more imports, reduce interest rate, and maintain a stable exchange rate and inflation rate in the Gambia. The negative sign of export means policymakers should pay less attention to export.
Table of Contents
1.0. INTRODUCTION
1.1 Purpose of Research / Significance
1.2 Objectives of the study
1.3 Research questions
1.4 Limitation
2. LITERATURE REVIEW
2.1 Theoretical Literature Review
2.2 Empirical Literature Review
3. METHODOLOGY
3.1 Econometric Framework and Model Specification
4.ECONOMETRCIS ANALYSIS OF RESULTS
5. CONCLUSION AND RECOMMENDATION
Research Objectives and Focus
The primary objective of this research is to evaluate the general impact of trade on the Gambian economy using econometric analysis and to determine whether trade serves as a robust factor for economic growth, while examining the linkages between exports, imports, interest rates, exchange rates, and inflation.
- Investigation of the impact of trade on the overall economic growth of The Gambia.
- Analysis of the relationship between trade variables and the Gambian GDP.
- Evaluation of the causal linkages between macroeconomic indicators and trade performance.
- Provision of policy recommendations to enhance trade-led economic growth.
Excerpt from the Book
2.1 Theoretical Literature Review
Since this study is about the impact of trade on economic growth of the Gambia, it makes sense to review some of the major trade theories in the existing literature as well. I will first like to emphasis that, no single study can completely review all the trade theories in the literature. Therefore, this study attempts to review some of the important trade theories found in the literature in a selective manner.
To begin with a discussion of the mercantilists’ views on trade. First, the mercantilists believed that the strength, power, capabilities, wealth, as well as the capacity of a nation depend on the amount of precious metals in its possession. In this regards, silver and gold were considered to be more valuable in relation to any other precious metal. As a result of this kind of orientation, the mercantilists advocated for a process that is popularly referred to in the literature as bullionism (Heckscher 1935). In other words, countries should concentrate on acquiring precious metals as much as possible, especially silver and gold in the process of participating in international trade because they assumed that wealth of the world are fixed.
Summary of Chapters
1.0. INTRODUCTION: This chapter provides an overview of the Gambian economy's performance and establishes the background, objectives, and significance of investigating the impact of trade on economic growth.
2. LITERATURE REVIEW: This section reviews relevant classical and modern trade theories, followed by an exploration of empirical studies conducted both within The Gambia and internationally to identify the trade-growth nexus.
3. METHODOLOGY: This chapter details the econometric framework, including the use of time series data from 1965 to 2016, and the application of regression models and software to analyze the growth determinants.
4.ECONOMETRCIS ANALYSIS OF RESULTS: This chapter presents and interprets the OLS regression results, unit root tests, and co-integration analysis to examine the relationships between trade variables and economic growth.
5. CONCLUSION AND RECOMMENDATION: This chapter summarizes the findings regarding the impact of trade on the Gambian economy and offers policy recommendations to foster sustainable economic growth.
Key Keywords
Economic Growth, Trade, Vector Error Correction Model, ADF Test, Johansen Co-integration Test, The Gambia, Macroeconomics, Export-Led Growth, Regression Analysis, Real Effective Exchange Rate, Inflation, Interest Rate, Import, Econometrics
Frequently Asked Questions
What is the primary focus of this research study?
The study focuses on evaluating the general impact of trade on the economic growth of The Gambia from 1965 to 2016 through an econometric lens.
What are the central thematic areas covered in this work?
The core themes include trade liberalization, macroeconomic policy effects, export-led growth hypotheses, and the statistical relationship between trade variables and GDP.
What is the primary research objective?
The goal is to determine if trade is a robust determinant of economic growth in The Gambia and to identify the linkages between exports, imports, interest rates, exchange rates, and inflation.
Which scientific methods were employed?
The research uses econometric methods, specifically the Augmented Dickey-Fuller (ADF) test, Johansen co-integration test, Vector Error Correction Model (VEC), and OLS regression analysis.
What is covered in the main section of the paper?
The main part includes a literature review of trade theories, a detailed methodology chapter, and an econometric analysis chapter interpreting the regression results.
Which keywords best characterize this study?
Keywords include Economic Growth, Trade, VEC Model, The Gambia, Econometrics, and macroeconomic indicators.
How does the study handle data limitations?
The author addresses data insufficiencies (such as the lack of specific exchange rate data) by using proxies like the Real Effective Exchange Rate and acknowledging these limitations in the research design.
What is the author's final conclusion regarding exports in The Gambia?
The study found a negative correlation between exports and economic growth in the specified period, leading the author to suggest that policymakers should currently prioritize other strategies for economic expansion.
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- Ebrima K. Ceesay (Autor:in), 2017, The Impact of Trade on the Economic Growth of The Gambia, München, GRIN Verlag, https://www.hausarbeiten.de/document/414259
