Akademik Veri Yönetim Sistemi
International Journal of Business Management and Economic Research(IJBMER), cilt.8, sa.3, ss.940-956, 2017 (Hakemli Dergi)
The effects of trade on growth have been one of the most popular issues in economic literature. Though there is a vast number of a theoretical and empirical study concerning the topic, there is still an ongoing debate over to what extent and in which direction growth is affected by trade. The main purpose of this paper is to obtain comprehensive empirical findings and find out whether trade has a significant effect on growth and also whether this effect differentiates for countries with different income levels. The direction, degree and power of the effects of trade on growth are investigated by considering exports, imports and trade volume. Since we have taken into consideration the fact that this effect may differ in countries of different income levels, we have adopted a classification of countries suggested by the World Bank depending on income levels of the countries, and an annual data set comprising the period between 1995 and 2015 is used for the selected countries. Panel data analysis is conducted and more specifically, common correlated effects initially introduced by Pesaran (2006), and panel autoregressive distributed lag models put forward by Pesaran, Shin and Smith (1999) are estimated since the series have both cross-sectional and time series properties. Empirical findings suggest that trade affects national income positively. We have strong evidence that trade leads to growth mainly in high income countries. Besides, country specific estimates are also presented unlike the literature.