IMPACT OF TRADE ON THE ECONOMIC GROWTH OF EMERGING ECONOMIES

Abstract

This research aims to determine whether the hypothesis that trade is a major determinant of GDP growth (an indicator of economic growth). Since this theory is being adopted by many emerging economies, the selected countries in this research paper are emerging economies (China, India, Indonesia, Malaysia, South Korea and Thailand). To test this theory the regression analysis was used for variables, trade (% of GDP), exports of goods and services (annual% of growth), imports of goods and services (annual% of growth), broad money growth (annual %), inflations GDP deflator (annual %), manufacturing value added (annual % growth)/ industry value added (in case of China). The data for the above-mentioned countries was collected using WDI (World Development Indicators) for the period 1990 -2014 (time span of 24 years). The results showed that countries that were trade led countries had exports and imports (the factors for indicating trade) as significant factors of economic growth. While the manufacturing led countries had manufacturing growth as the significant factor of economic growth. It is suggested for these countries to adopt new financial, economic and political policies to enhance their economic growth.