Abstract
As was first stressed by the classical economists Adam Smith and David Ricardo, international trade plays a crucial role in the growth process. The paper aims to analyze the influence of foreign trade on economic performance in the wood processing industry (WPI) of Czechia and Slovakia. The multivariate regression method (MLR), assumption tests for MLR models, and Granger causality test were applied to identify association between foreign trade economic performance, and indicators were formed to measure the effects of foreign trade at the industry level. The Granger test revealed the unidirectional causality in the Slovak WPI and bidirectional causality in the Czech WPI. The results revealed that the net export growth has a positive effect on the economic performance of the industry, but only if the growth in imports is lower than in exports. The balanced trade balance indicated no influence of foreign trade on economic performance. The paper contributes to existing knowledge with indicators for evaluation of foreign trade effects on the performance of the industry. The paper also brings new empirical knowledge in trade balance effects on the economic performance of industries.
Highlights
Economic growth belongs among the main goals of each economy and enterprise.There are different indicators used by measuring economic performance and growth at a macroeconomic and a microeconomic level
Export of wood-based products has a positive impact on economic performance of the wood processing industry
Net export growth has a positive effect on the economic performance of the wood processing industry
Summary
Economic growth belongs among the main goals of each economy and enterprise. There are different indicators used by measuring economic performance and growth at a macroeconomic and a microeconomic level. Their matter is common, all measures are based on value added. As for performance, at the level of industries (mesoeconomic level), it is going on interconnection of macro and micro level view at economic performance and the principle of value added is kept. Investigation of factors influencing economic performance and growth has been the subject of much research. Foreign trade belongs among the main sources of economic growth as foreign trade theories by classical economists has revealed. According to Afonso (2001), a trade openness tends to be beneficial for growth, especially openness to the foreign investment supporting innovation rate
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