The Study on the Impact of Liberia’s Exports and Imports on Its Economic Growth

Abstract

Liberia is labeled at the peak considered as one of the poorest countries in the world. Therefore, Liberia needs to take an effective trade policy approach to promote both domestic and international trade facilitation if it is to achieve sustainable and further economic growth. International trade is the engine for economic development, and it has become one of many economic discussions not only among West African States and member countries but globally that Liberia is no exception to since exports-trade leads to GDP growth and economic development. As a result of frequent trade deficits and Liberia’s economic reliance on extractive commodities for trade in agricultural goods, the study sought to analyze the role of exports-trade on economic growth and development with regard to Liberia. The study was conducted using secondary data generated from the World Bank Development Indicators (WBDI) for the period 2000-2019. The study employed a time series regression model of the Ordinary Least Squares (OLS) and technique by Stock and Wilson (1988) to analyze Liberia’s trade performance using macroeconomic indicators/variables that have an effect on economic growth, such as, Exports, Foreign Direct Investment (FDI), Population growth, Imports, Gross Fixed Capital Formation, (GFCF) and Gross Domestic Product (GDP) as the key indicators of analysis. The regression results obtained from the study on the Ordinary Least Squares tests show a linear association and a straight-line relationship among the variables, namely: export, foreign direct investment, population and economic growth in Liberia. With the estimated results, import has a negative impact and relationship with Liberia’s GDP growth. The effect of export was positive and highly statistically significant.