The objective of this study is to analyze the effects
of trade openness on economic growth in the Republic of Congo over a period
from 1986 to 2016. Following the estimation of the Vector Error Correction
Model (VECM), the result shows that in the short and long term, trade openness
negatively affects economic growth in Congo. That means, the Congo does not
benefit from the trade openness policy. This result is explained by the strong
dependence of the Congolese economy on exports of raw materials (natural
resources). This result has given rise to economic policy implications.
References
[1]
African Economic Outlook (2016). Africa Outlook Report: Sustainable Cities and Structural Transformation.
[2]
Aghion, P., & Howitt, P. (1992). A Model of Growth through Creative Destruction. Journal of Econometric Society, 60, 323-351. https://doi.org/10.2307/2951599
[3]
Alcala, F., & Ciccone, A. (2004). Trade and Productivity. The Quarterly Journal of Economics, 119, 613-646. https://doi.org/10.1162/0033553041382139
[4]
Amar, E., & Hajar, B. (2017). The Effect of Trade Openness on Economic Growth in Algeria. Algerian Review of Economic Development (ARED), 6, 25-41.
[5]
Aoun, M. C. (2006). Impact of Oil Rent on the Economies of Oil Exporting Countries. Single Doctoral Dissertation, University of Paris Dauhine Edocif.
[6]
Baldwin, R. (1989). Measurable Dynamic Gains from Trade. National Bureau of Economic Research, Working Paper No. 3147. https://doi.org/10.3386/w3147
[7]
Baldwin, R., & Seghezza, E. (1996). Trade Induced Investment Led Growth. International Economics, 61, 507-537.
[8]
Ben-David, D., & Loewy, M. (2003). Trade and the Neoclassical Growth Model. Journal of Economic Integration, 18, 1-16. https://doi.org/10.11130/jei.2003.18.1.1
[9]
Ben-David, D., & Loewy, M. B. (1996). Free Trade and Long-Term Growth. Working Paper No. 32-96. https://ageconsearch.umn.edu/record/275620
http://doi.org/10.22004/ag.econ.275620
[10]
Ben-David, D., & Loewy, M. B. (1998). Free Trade Growth and Convergence. Journal of Economic Growth, 3, 143-170. https://doi.org/10.1023/A:1009705702579
[11]
Ben-David, D., & Loewy, M. B. (2000). Knowledge Discrimination Capital Accumulation Trade and Endogenous Growth. Oxford Economic Paper, 52, 637-650.
https://doi.org/10.1093/oep/52.4.637
[12]
Cass, D. (1965). Optimum Growth in an Aggregative Model of Capital Accumulation. Review of Economic Studies, 32, 233-240. https://doi.org/10.2307/2295827
[13]
Cohen, D. (1997). Richesse du monde, pauvretés des nations. Dossier Economie, rééd. Flammarion, coll. “Champs”, 1998.
[14]
Dollar, D., & Kraay, A. (2003). Institution, Trade and Growth. Journal of Monetary Economics, 50, 133-162. https://doi.org/10.1016/S0304-3932(02)00206-4
[15]
Dowick, S., & Golley, J. (2004). The Trade Openness and Growth: Who Benefits. Oxford Review of Economic Policy, 20, 38-56. https://doi.org/10.1093/oxrep/grh003
[16]
Eaton, J., & Kortum, S. (2002). Technology, Geography and Trade. Econometrica, 70, 1741-1779. https://doi.org/10.1111/1468-0262.00352
[17]
Edwards, S. (1992). Trade Orientation, Distortion and Growth in Developing Countries. Journal of Development Economics, 39, 31-57.
https://doi.org/10.1016/0304-3878(92)90056-F
[18]
Ekodo, R., & Ngomsi, A. (2017). Trade Openness and Economic Growth in the CEMAC Zone. Journal of Economics and Development Studies, 5, 58-67.
[19]
Ethier, W. J. (1982). National and International Returns to Scale in the Modern Theory of International Trade. American Economic Review, American Economic Association, 72, 389-405.
[20]
Francois, J., & McDonald, B. (1996). Liberalization and Capital Accumulation in the GTAP Model. GTAP Technical Paper No. 7, Global Trade Analysis Project.
[21]
Frankel, J., & Romer, D. (1999). Does Trade Cause Growth? American Economic Review, 89, 379-399. https://doi.org/10.1257/aer.89.3.379
[22]
Gachili, N., & Dazoue, D. (2018). Trade Openness and Economic Growth in Cameroon. Global Journal of Human Social Science, 18, 28-37.
[23]
Grossman, G. M., & Helpman, E. (1991). Comparative Advantage and Long Term Growth. The American Economic Review, 80, 796-815.
[24]
Grossman, G., & Helpman, E. (1990). Trade Knowledge Spillovers and Growth. Working Paper No. 3485, National Bureau of Economic Research.
https://doi.org/10.3386/w3485
[25]
Gunder, F. (1970). Latin America: Underdevelopment or Revolution. Monthly Review Press.
[26]
Harrison, A. (1996). Openness and Growth: A Time Series Cross Country Analysis for Developing Countries. Journal of Development Economics, 48, 419-447.
https://doi.org/10.1016/0304-3878(95)00042-9
[27]
International Monetary Fund (IMF) (2013). World Economic Outlook, Economic and Financial Studies. IMF Press.
[28]
José, R., & Lopez, C. (2020). Promoting Export Diversification in Fragile Countries. World Bank Group.
[29]
Koopmans, T. (1965). On the Concept of Optimal Growth. In J. Johansen, (Ed.), On the Concept of Optimal Economic Growth (pp. 225-287). North-Holland Publishing Co.
[30]
Krugman, P. (1987). The Marow Moving Band, the Ducth Disease, and the Competitive Consequences of Mrs Thatcher: Note on Trade in the Presence of Dynamic Scale Economies. Journal of Development Economics, 27, 41-55.
https://doi.org/10.1016/0304-3878(87)90005-8
[31]
Lambrechts, J., McGrath, E., & Rule, N. (2012). Does Free Trade Result in Higher GDP Per Capita: An International Perspective. Open Journal of Systems, 5, 12-29.
https://doi.org/10.21153/dpibe2012vol5no0art53
[32]
Lee, H. Y., Ricci, L. A., & Rigobon, R. (2004). Once Again, Is Openness Good for Growth? Journal of Development Economics, 75, 451-472.
https://doi.org/10.1016/j.jdeveco.2004.06.006
[33]
Levine, R., & Renelt, D. (1992). A Sensitivity Analysis of Cross Country Growth Regressions. The American Economic Review, 82, 942-963.
[34]
Lucas, R. (1990). Why Does Not Capital Flow from Rich to Poor Countries? American Economic Review, 80, 92-96.
[35]
Madariaga, N. (2010). Measurement and Recent Developments in Franc Zone Trade Integration (pp. 1-24). Paris Cedex 12, France: Agence francaise de développement
[36]
Mankiw, G., Weil, D., & Romer, D. (1992). A Contribution to the Empirics of Economic Growth. The Quarterly Journal of Economics, 107, 407-437.
https://doi.org/10.2307/2118477
[37]
Manole, Y., & Spatareanu, M. (2010). Trade Openess and Income Reexamination. Economics Letters, 106, 1-3. https://doi.org/10.1016/j.econlet.2009.06.021
[38]
Marelli, E., & Signorelli, M. (2011). China and India: Openness, Trade and Effects on Economic Growth. European Journal of Comparative Economics, 8, 129-154.
[39]
Melitz, J. (2003). The Impact of Trade on Intra Industry Reallocations and Aggregate Industry Productivity. Econometrica, 71, 1695-1725.
https://doi.org/10.1111/1468-0262.00467
[40]
Obadan, M., & Okojie, I. (2010). An Empirical Analysis of the Impact of Trade on Economic Growth in Nigeria. JOS Journal of Economics, 4, 1-23.
[41]
Rivera-Batiz, L., & Romer, P. (1991). Economic Integration and Endogenous Growth. The Quarterly Journal of Economics, 106, 531-555. https://doi.org/10.2307/2937946
[42]
Rodriguez, F., & Rodrik, D. (2000). Trade Policy and Economic Growth: A Skeptics Guide to the Cross National Evidence. NBER Macroeconomics Annual, 15, 261-325.
[43]
Romer, P. (1990). Endogenous Technological Change. Journal of Political Economy, 98, S71-S102. https://doi.org/10.1086/261725
[44]
Sachs, J., & Warner, A. (1995). Natural Resource Abundance and Economic Growth. Working Paper No. 5398, National Bureau of Economic Research.
https://doi.org/10.3386/w5398
[45]
Sala-i-Martin, X., & Subramanian, A. (2003). Addressing the Natural Resource Curse: An Illustration from Nigeria. Working Paper No. 9804, National Bureau of Economic Research. https://doi.org/10.3386/w9804
[46]
Solow, R. (1956). A Contribution to the Theory of Economic Growth. Quarterly Journal of Economics, 70, 65-94. https://doi.org/10.2307/1884513
[47]
Swan, T. (1956). Economic Growth and Capital Accumulation. Economic Record, 32, 334-361. https://doi.org/10.1111/j.1475-4932.1956.tb00434.x
[48]
UNCTAD (United Nations Conference on Trade and Development) (2001). Guide to Technical Cooperation. International Trade Center.
[49]
UNCTAD (United Nations Conference on Trade and Development) (2012). Annual Report: Exporting for Sustainable Development. International Trade Center.
[50]
WDI (World Development Indicators) (2018). Database World Bank.
https://databank.worldbank.org/source/world-development-indicators
[51]
World Bank (2015). Economic and Financial Situation Monitoring Report. World Bank Group Congo.
[52]
WTO (World Trade Organization) (2016). World Trade Statistical Review.
[53]
Young, A. (1991). Learning by Doing and the Dynamic Effects of International Trade. The Quarterly Journal of Economics, 106, 369-405.
https://doi.org/10.2307/2937942
