Various studies have been conducted to analyze the impact of trade on the economic growth of different nations. Some of the studies focus on the positive impact of trade on the economic growth of India, while others focus on the negative impact of trade on the economic growth of Nigeria. These studies are also aimed at identifying the limits of trade liberalization in terms of its effect on the economic growth of the country.
Positive spillover effects of India’s trade on economic growth
Despite being a relatively small country, India has contributed significantly to economic growth in South Asia. It is also the largest trading partner of smaller economies, including Sri Lanka, Bangladesh and Nepal. However, official data are only a partial picture of the region’s trade. This paper investigates the role of India’s economy in explaining growth in the region.
The study finds that India’s growth has good explanatory power for overall growth in South Asia after 1995. It does not depend on the conventional trade channel, although it does show some positive spillover effects.
This positive impact on South Asian countries can be explained by a combination of factors. Among these are India’s higher level of growth, greater openness and better integration into the world economy.
Negative spillover effects of trade on employment growth in Nigeria
Among the many factors that determine the destinies of a country is the spillover effect of its neighbors’ activities. It is no secret that economic interdependence piques the interest of policymakers. This is especially true in emerging markets. In addition, foreign shock is a crucial factor in determining a country’s business cycle. Hence, examining the impact of trade on employment growth in Nigeria is a must.
The question is how do we go about it? The best way to achieve this is to use a well-designed multi-dimensional model that can track the effects of various inputs, outputs and outcomes in an unbiased manner. In turn, this model can be used to provide insight into a range of issues from the state of the economy to the determinants of human mobility.
Empirical studies on the impact of trade on economic growth in the EU
Until now, empirical studies on the impact of trade on economic growth in the EU have not been conducted extensively. However, there are a number of important research findings on this topic.
The first study by Michelis and Zestos (2004) explored the Granger causality from export and import growth to GDP growth. They found that a larger trade deficit was associated with a negative effect on economic growth.
In addition, Awokuse (2008) investigated the impact of trade on economic growth in three European countries. He found that increased exports facilitated intense competition and improved productivity. He also suggested that increased exports may be accompanied by increased imports of capital and intermediate products.
A panel data approach is used to estimate the degree of openness and competitiveness. It includes fixed effects to account for country-specific and cyclical effects.
Forecast decline in economic growth in the remaining 18 EU countries
Compared to the June 2022 projections, the economic growth forecast in the remaining 18 EU countries has been revised downward. This is due to increased uncertainty about the outlook for the world economy, particularly due to the ongoing war in Russia and Ukraine. These factors will add downward drag to the global economy.
Russia’s war in Ukraine is expected to exacerbate supply shortages and erode global trade. This is projected to reduce global growth by about 1% a year. However, the economic outlook has been revised downward only for the latter years of the projection horizon. The short-term outlook remains highly uncertain and may lead to recessions in some countries.
The euro area budget balance is expected to improve in the second half of the projection horizon, but not as significantly as in the previous year. The upward revision for the first half of the year reflects stronger wage growth, while the downward revision for the remainder of the horizon reflects increased uncertainty.
Limits of trade liberalization on economic growth
Despite the fact that trade liberalization has stimulated economic growth in many countries, there are still limits to its effect. This article reviews the latest empirical evidence and provides an overview of the theory behind this phenomenon.
Several factors determine the extent of the effect of trade liberalization on economic growth. These include the size of the economy, technological proficiency, and development level. Nevertheless, all studies seem to find a positive relationship between trade liberalisation and economic performance.
While there are no hard data on this, a number of studies suggest that more liberal trade regimes tend to have higher GDP growth.
