Abstract
The trade openness is one of the most important determinants of a country’s relative level of economic health. It plays a vital role for most free market economies in the world. This research is an attempt to investigate, particularly, the impact of the trade openness on the economic growth in Niger; and generally, the relationship between all the variables under study. Four (4) variables namely real economic growth rate represented by real gross domestic product growth rate (GDPGR), trade openness (TRDOP), real exchange rate (REEXR) and foreign direct investment (FDI) have been considered in the model. The paper used time series data covering the period from 1980 to 2013 as well as time series methods for the econometric analyses. The results show that there exists a long term relationship between all the variables; the independent variables affects the economic growth in the short-run; only the trade openness and the real exchange rate influence economic growth unidirectionally; except foreign direct investment (FDI), all the variables have explanatory power on economic growth in Niger. The implication of this study is that the trade openness has been efficient to spur the economic growth in Niger over the period of study. Therefore, it is a key indicator which the government should care about.
Highlights
International trade, called foreign trade occurs when goods and services are exchanged across national boundaries
Unit Root Test Results The output of this test indicates that, only gross domestic product growth rate (GDPGR) and foreign direct investment (FDI) are stationary at level; but after the first difference, all the variables become stationary
An increase of the trade openness (TRDOP), on average, by 1% increases the economic growth by 16.73851%, ceteris paribus .This means that as long as Niger was opening more to international trade during the period of study, its economy was likely to grow, in other words the openness to trade enhanced the economic growth in Niger
Summary
International trade, called foreign trade occurs when goods and services are exchanged across national boundaries. Nowadays, it goes beyond this scope of definition, it includes some cross border activities such as overseas investment and contracted projects. (2014) Does Trade Openness Matter for Economic Growth in Niger? Whether and how trade openness influences economic growth has for long been an interesting point of research for development economists. The tendency is that good international trade policies are in favor of spurring economic growth; it is not a sufficient condition for economic growth and development. Alfred Marshall stated that “The causes which determine the economic progress of nations belong to the study of international trade”.
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