Effects of Externality on Trade Dynamics and Sustainable Development in the European Economy

Abstract

This research is concerned with the effects of externality on trade dynamics and sustainable development in the European Union Economy. The focus on trade dynamics as a measure of a country’s degree of responsiveness to international trade is critical where relative changes in the socio-economic trend and sustainable growth and development are essential. This paper aims to compare the relative measure of each country’s share of trade vis-à-vis the imports and exports to the gross domestic product (GDP) and to also ascertain the level of each country’s response to externality concerning sustainable growth and development. 2009 to 2019, representing the period after the 2008 global recession and the COVID-19 pandemic were used as the period under consideration. The ratio of trade to GDP was employed in the analysis to ascertain the level of trade in the European Union market. The findings showed that the relative comparison of the level of trade to the GDP in the European countries responded positively as an indicative measure of externality in assessing the sustainable economic development between countries in the European economy. This research is a significant contribution geared towards improving the economic realities of sustainability, leading to enhanced productivity within the context of international trade and externality in the European economy.