Correlation between the Level of Economic Growth and Foreign Trade: The Case of the V4 Countries

Abstract

Purpose: The main aim of this article is to search for long-term correlations between the level of economic growth and the level of export and import with cointegration analysis. To this end, the authors used the statistical data of the V4 countries which, since the 1990s, have been implementing market economy elements to different degrees. Approach/Methodology/Design: Econometric methods were used, including stationariness testing using ADF and KPSS tests and Engle-Granger cointegration test. Findings: The results obtained confirm that only in the case of Poland and Hungary there were two-way long-term interdependencies. For Poland, it was a pair of variables (GNP and export value), for Hungary (GNP and import value). No long-term correlation between economic growth and the value of foreign trade could be confirmed for Slovakia and the Czech Republic. Practical Implications: The study of interdependence using statistical methods is an important element in testing economic theories in the field of economic growth research in the countries of the former communist bloc. It is also an important stage in the search for economic growth generators. Originality/Value: Given the importance of trade, it is necessary to study the interaction of variables, check whether exports and imports had an impact on the level of economic growth and whether economic growth determined the increase in foreign trade turnover. The results obtained are the basis for the construction of a vector-autoregressive models (VAR).