Top PDF The Impact of International Economic Sanctions on Trade An empirical Analysis

The Impact of International Economic Sanctions on Trade An empirical Analysis

The Impact of International Economic Sanctions on Trade An empirical Analysis

An argument that is often remarked analysing the sanctions is the possibility that the sender country should face a phenomenon of trade diversion. It has been argued that sanctions-busting is always likely to occur. Sanctions are able to create powerful incentives for evasion. Trade can be diverted trough new ingenious relationships devised by domestic and third- country firms. Particularly Drezner (2000) distinguishes if the sender country is unable to enforce the application of sanctions due to defections by private rent-seeking actors (sanctions-busting) or by nation-states (backsliding). This phenomenon is often indicated as one of the main reason of failure of the economic punishment. Take Nicaragua in 80 s under the Sandinista government. After the United States, under the Reagan administration, imposed sanctions on it, other western countries disagreed with American policy. Canada, for instance, permitted Nicaragua to move its Miami-based foreign trade office to Toronto, stating that it had ‘a perfect right’ 13 to sell Nicaragua anything it wants to buy. This is the rationale that very often led to diplomatic efforts for multilateral co-operation in sanctions enforcing. It is also behind the Helms-Burton Act and the Iran/Libya Sanctions Act, which threatens to punish third-country corporations that conduct business in Cuba, Iran, and Libya. Therefore, according to this point of view it could be argued that U.S. competitors trade with U.S.-targeted countries capturing the business when the United States imposes unilateral sanctions. Hufbauer (1997) found positive evidence of this hypothesis.
Show more

29 Read more

An Empirical Analysis of Trade and Economic Growth in Libya

An Empirical Analysis of Trade and Economic Growth in Libya

In 1980s, Libya faced a major economic crisis. The main cause of this crisis was the fall of world oil prices. It was the time the oil producing countries realized that price fluctuations can drastically impact their economies as their countries are heavily dependent on oil revenues. They realized that their economies need to be diversified otherwise any major fluctuations in the oil price will have a drastic impact on their economy. It was witnessed that the economies of these countries were not sustainable and vulnerable to price variations of oil. In 1990s, the country faced another major economic shock, when UN announced sanctions on Libya following Lockerbie bombing. This was done after Libya declined involvement in this case and refused to hand over suspects for investigation. The rigid stance in this case had severe repercussions for Libya. It lost the trade of its main source of exports of oil reserves. It also resulted in restrictions of aviation services in Libya. It lost the involvement of foreign companies on its development projects. These companies were prohibited to continue its operations in Libya. The world also faced issues as the Libyan oil is of supreme quality and has high demands in European countries and America. After lifting of UN sanctions in 2003, Libya has made efforts to come out of the socialist economy and encourage foreign trade and free market. It has realized that there is a shift in the world towards deregulation and encouraging foreign investments. This resulted in increased economic growth and macroeconomic stability. Despite the decline in oil revenue, the global economic crisis in Libya in 2009 did not have much impact, with non-oil growth remaining buoyant (CountryWatch, 2013, p. n.d).
Show more

260 Read more

IMPACT OF THE INTERNATIONAL FINANCIAL CRISIS ON ECONOMIC GROWTH AND FOREIGN DIRECT INVESTMENT: AN EMPIRICAL ANALYSIS

IMPACT OF THE INTERNATIONAL FINANCIAL CRISIS ON ECONOMIC GROWTH AND FOREIGN DIRECT INVESTMENT: AN EMPIRICAL ANALYSIS

Thus, recent projections on prospects for global development for 2009 show an unprecedented deterioration of socioeconomic indicators. These projections consider that the global economy experienced a historical decline in real GDP of 1.3%; countries where per capita production is expected to decline represent three quarters of the global economy (IMF, 2009a). Private consumption and fixed capital investment would decrease to, 1.5% and 9.8% respectively (World Bank, 2009a). The volume of trade in goods and services would fall by 11% (IMF, 2009a). The flow of foreign direct investment (FDI), which fell to 21% in 2008, was likely to worsen in 2009 (United Nations, 2009b Nations). The number of unemployed reached a record of 290 million (International Labor Office. The number of undernourished and hungry would cross the threshold of unprecedented billion (World Bank, 2009c). If no action was taken, between 200 thousands and 400 thousands more children could die each year (World Bank, 2009c).
Show more

21 Read more

A Panel Analysis of the FDI Impact on International Trade

A Panel Analysis of the FDI Impact on International Trade

Most empirical research on this topic has looked for how changes in FDI correlate to changes in trade and vice versa. In other words, they have ques- tioned whether systematic changes in FDI are related to systematic changes in trade, in particular if trade and FDI are substitutes (negative correlation) or complementary (positive correlation). These studies have not questioned or studied the direction of causality between FDI and trade and this seems to be a general limitation. As we will see contrasting results are associated with the diversity of interactions that exist between FDI and trade, but also, with di¤erent perspectives of analysis: country, industry and …rm among others. At the country level, as suggested by Fontagné (1999), the links between trade and FDI can be seen from three di¤erent perspectives: the investing or home country, the recipient or host country and third countries. For the investing country FDI can be a substitute for trade to the extent that exports are replaced by local sales by the a¢ liates in foreign markets. On the other hand, FDI may also be complementary to trade to the extent that induces intra-…rm trade in intermediate and …nal goods (e.g. headquarter services). In the former case investing abroad will have a negative impact on production, employment and trade balance in the home country, while in the latter case will have a positive impact.
Show more

21 Read more

The impact of immigration on international trade: a meta‐analysis

The impact of immigration on international trade: a meta‐analysis

Meta‐analysis  is  an  increasingly  popular  and  valuable  tool  to  offer  a  statistical  synthesis  of  quantitative studies that address largely the same impact question. One objective of meta‐analysis is  to  test  the  null  hypothesis  that  a  pooled  combination  of  different  point  estimates  is  equal  to  zero  when  findings  from  the  entire  area  of  research  are  combined  (Cipollina  and  Salvatici,  2010).  Alternatively,  meta‐analysis  may  provide  a  stylized  average  quantity  in  a  popular  area  of  investigation, such as the price elasticity in the demand for gasoline or the rate of convergence of  income  across  regions  or  countries.  Meta‐analysis  was  initially  applied  in  the  medical  and  natural  sciences to compare and synthesize quantitative impact results. Nowadays, this method is applied in  many different research fields in economics. For example Nijkamp and Vindigni (2000) studied the  agriculture  sector  in  several  countries;  Longhi  et  al.  (2005)  studied  the  impact  of  immigration  on  wages; Brander et al. (2007) studied eco‐tourism; Cipollina and Salvatici (2010) studied the impact of  trade agreements on trade flows; Card et al. (2010) carried out an analysis of evaluations of active  labor market policy; and in 2005 the Journal of Economic Surveys devoted a whole special issue (Vol.  19, No.3) to this approach.   
Show more

30 Read more

The impact of immigration on international trade: a meta-analysis

The impact of immigration on international trade: a meta-analysis

Since the early 1990s many empirical studies have been conducted on the impact of international migration on international trade, predominantly from the host country perspective. Because most studies have adopted broadly the same specification, namely a log-linear gravity model of export and import flows augmented with the logarithm of the stock of immigrants from specific source countries as an additional explanatory variable, the resulting elasticities are broadly comparable and yield a set of estimates that is well suited to meta-analysis. We therefore compile and analyze in this paper the distribution of immigration elasticities of imports and exports across 48 studies that yielded 300 observations. The results show that immigration complements rather than substitutes for trade flows between host and origin countries. Correcting for heterogeneity and publication bias, an increase in the number of immigrants by 10 percent may be expected to increase the volume of trade on average by about 1.5 percent. However, the impact is lower for trade in homogeneous goods. Over time, the growing stock of immigrants decreases the elasticities. The estimates are affected by the choice of some covariates, the nature of the data (cross-section or panel) and the estimation technique. Elasticities vary between countries in ways that cannot be fully explained by study characteristics; trade restrictions and immigration policies matter for the impact of immigration on trade. The migrant elasticity of imports is larger than that of exports in about half the countries considered, but the publication bias and heterogeneity-corrected elasticity is slightly larger for exports than for imports.
Show more

35 Read more

Sanctions and the Blurred Boundaries of International Economic Law

Sanctions and the Blurred Boundaries of International Economic Law

83 . In this regard, Lowenfeld once proposed that one of the reasons why “the GATT/WTO has had little impact on policies of economic sanctions” was that at least twelve states that were “targets of sanctions applied by the Western industrial states were not contracting parties to the GATT at the relevant time.” Lowenfeld, supra note 2, at 368–69. Lowenfeld further noted that the WTO system is aimed primarily at combating states’ mercantilist instincts, while “[e]conomic sanctions for political ends are the opposite of mercantilism,” calling instead for “sacrifices, on the ground that there are issues more important than economic advantage.” Id. at 369. A re- markable joint statement by Austria and Germany, criticizing CAATSA for subvert- ing cooperation on sanctions for unilateral trade objectives, proposes a bright line between sanctions and trade policy and implies that trade disputes will increase if sanctions cross that line:
Show more

39 Read more

The Impact of International Trade on Economic Growth in Vietnam 1990 - 2015

The Impact of International Trade on Economic Growth in Vietnam 1990 - 2015

factors to economic development. The debate on the relationship between export expansion and economic growth has attracted much attention in the field of development economic. More empirical research has been conducted to assess the role of exports in the economic growth of developing countries from various perspectives (Miochealy 1977). Previous studies have shown that exports are a growth engine. It increases foreign exchange earnings, improves the balance of payments, creates jobs and develops export-oriented industries and improves government revenue through taxes, fees, and tariffs. These benefits will bring better living conditions for people in the export economy as the foreign exchange will contribute to meeting their needs for some essential goods and services. However, to achieve these benefits, export policies and products must be adjusted to the conditions of the economy. Tingvall & Ljungwall (2012) use a multi-country meta-analysis and conclude that exports have contributed to the growth of the PRC economy more than in other countries. Saaed & Hussain (2015) investigated the impact of exports and imports on the economic growth of Kuwait over the period 1977-2012. The study used Granger Causality, Johansen co-integration and Pairwise Granger Causality was carried out. The result shows that economic growth Granger Cause Import. Export is found to Granger Cause import. These results also provide evidence that growth in Tunisia was propelled by growth-led import strategy as well as export-led import. Tovonjatovo & Dong (2015) analyzes the impact of exports on economic growth Madagascar, using data from 1983 to 2013. This paper uses cointegration analysis, unit roots, coupled with VAR and IRF analysis. The result shows a mostly positive and significance relationship between exports and growth. Hussain & Saaed (2014) examined the nexus of Exports, Imports and Economic Growth in Saudi Arabia, using annual data for the period 1990-2011. The result of the causation between Exports and economic growth and imports and economic growth was statistically insignificant.
Show more

8 Read more

Nation State Involvement in Cryptocurrency  and the  Impact to Economic Sanctions

Nation State Involvement in Cryptocurrency and the Impact to Economic Sanctions

In 1970, the U.S. passed the Bank Secrecy Act (BSA), this act establishes requirements for recordkeeping and reporting by financial institutions. It also requires banks to report cash transactions over $10,000, identify individuals who are conducting transactions, and maintain records. These records could then be used or subpoenaed by law enforcement in order to identify transactions that were part of illegal activity or in violation of sanctions. In the late 1980s and early 1990s, money laundering became a greater concern with the cocaine trade and international drug trafficking between North and South America. In 1992, an additional bill went into law, the Annunzio-Wylie Anti-Money Laundering Act. This Act strengthened the consequences for BSA violations, required Suspicious Activity Reports (SARs) and eliminated the use of Criminal Referral Forms. (Financial Crimes Enforcement Network, n.d.).
Show more

38 Read more

The Impact of UN and US Economic Sanctions on GDP Growth

The Impact of UN and US Economic Sanctions on GDP Growth

Economic sanctions aim at triggering political reforms or even overthrowing the target’s political regime. Moreover, economic agents may view sanctions as a sort of early‐warning signal that political or societal conflicts in the target state have the potential to escalate. Sanctions thus represent or indicate a serious threat to the target state’s political stability and can invoke a great deal of uncertainty about the future of the political and legal system. This ought to have a harmful impact on the target state’s trade and financial relations as well as on its domestic and foreign direct investment. Indeed, empirical evidence suggests that sanction episodes are associated with political turmoil and transition (Peksen and Drury, 2010; Allen, 2008; Marinov, 2005). Political instability, in turn, is found to have detrimental effects on investment and savings as well as on economic growth (Alesina et al., 1996; Alesina and Perotti, 1996; Aizenman and Marion, 1993). In a similar vein, sanctions may affect the target’s access to international credit markets as investors might be concerned about the sanctioned state’s solvency or the payment practices of a successor regime.
Show more

35 Read more

The Impact of Western Economic Sanctions on the Russian Banking Sector

The Impact of Western Economic Sanctions on the Russian Banking Sector

The third wave of Western sanctions against Russia went beyond previous measures in terms of depth and immensity. In July 2014, the US and the EU imposed new sanctions targeting particular sectors of the Russian economy as well as trade sanctions and expanded the existing financial restrictions even further. The sectoral sanctions were targeted directly at certain Russian industries such as banking, energy and defence sectors. In addition, Western countries imposed diplomatic sanctions against Russia by cancelling regular EU-Russia summits and bilateral discussions on visa matters. Russia was also suspended from the G8 meetings, which have since then been held without Russia. Negotiations with Russia on joining the Organisation for Economic Co- operation and Development (OECD) and the International Energy Agency (IEA) were also frozen. Russia responded with expanding its counter-sanctions against the sanctioning countries and banned food and agricultural imports from the US, the EU, Canada and Australia. (Crozet et al. 2016; Dreger, Fidrmuc, Kholodilin & Ulbricht 2016; European Council 2018)
Show more

81 Read more

ASSESSMENT OF THE IMPACT OF THE INTERNATIONAL TRADE IN AGRICULTURAL PRODUCTS ON THE EU ECONOMIC GROWTH

ASSESSMENT OF THE IMPACT OF THE INTERNATIONAL TRADE IN AGRICULTURAL PRODUCTS ON THE EU ECONOMIC GROWTH

The factors determining the specifi city of the international trade in agricultural products raise many doubts on whether this type of international trade promotes national, regional (in particular, in the case of the EU) and global economic growth to such a large extent as it is considered. Of course, there is much empirical evidence to show that agricultural export, especially in developing countries, prompts foreign earnings and national income (Sanjuan-Lopez & Dawson, 2010; Verter & Bečvářová, 2014; Verter & Bečvářová, 2016, etc.), brings the diversity of commodities (Verter & Bečvářová, 2016), ensures a high level of commodity concentration (Karasova, 2016) and helps to maintain stable demand and supply (Erokhin et al., 2014). Nevertheless, it is also the case that agricultural sector does not necessarily serve as a leading sector for economic growth (Gollin, 2010), and agricultural policies may have contradictory effects on farm income and revenue risk. For instance, the results of Severini et al.’s (2017) research disclosed that on one hand, the European Common Agricultural Policy and protectionist measures reduce farmers’ risk, which, in turn, allows them to involve in riskier activities, but on the other hand, it is less effective in terms of income stabilization as protectionist measures distort farmers’ risk management behaviour. Furthermore, the support of agriculture-favourable policies sometimes requires keeping of national currency rates unchanged. For instance, the EU agricultural policy makers introduced dubbed green rates as specifi c exchange rates. However, in order to prevent arbitrage trade from undermining the resulting price differences between member countries, policymakers also had to introduce border taxes and subsidies for both intra- and extra-Community trade in agricultural products (called monetary compensatory amounts). The system soon became technically complex, with disastrous implications for economic effi ciency” (Josling et al., 2010, p. 431).
Show more

15 Read more

THE IMPACT OF INTERNATIONAL MIGRATION ON INTERNATIONAL TRADE: AN EMPIRICAL STUDY OF AUSTRALIAN MIGRANT INTAKE FROM ASIAN COUNTRIES

THE IMPACT OF INTERNATIONAL MIGRATION ON INTERNATIONAL TRADE: AN EMPIRICAL STUDY OF AUSTRALIAN MIGRANT INTAKE FROM ASIAN COUNTRIES

To answer these questions, we have to discard the assumption that firms have perfect information about consumers. There is no reason to claim that firm’s managements are born with perfect buyer information, otherwise universities would not offer courses to teach market research skills and quantitative analysis. Insurance companies offering high wages to attract actuary graduates demonstrate that information is so important for the insurance firms’ pricing strategy. One possible explanation for the cycling up or cycling down processes could be that firms also conduct search to find buyers. The motive for firms to search for buyers is to find out whom the firms can charge a higher price from. The force that keeps the firms continuously searching for buyers is the market dynamics. Market dynamics, in marketing concept, means a continuous changing of buyer population in the market over time. The buyer population in the market consists of new buyers, repeat buyers, and one-off buyers who leave the market after purchase and those who re-enter the market after being absent for a period of time. The exit of current buyers who possess market information could reduce the information pool in the buyer population; however, the entry of new buyers who has little market information into the market could dilute the information pool. The former buyers’ re-entry into the market, they find themselves holding onto obsolete information. The market dynamics guarantee buyer information imperfection and the need for sellers to search for buyers who are willing to pay more. It follows that the price the sellers can charge is a positive function of better information. However, due to the diminishing return on greater volume of information, price changes in respect to the volume of information changes would be an increasing function with a decreasing rate.
Show more

333 Read more

Economic Growth and International Trade Effect on Fiscal Revenue Empirical Research in China Area

Economic Growth and International Trade Effect on Fiscal Revenue Empirical Research in China Area

The selected indicators have not fully endogenous, first of all, in terms of trade index, this article economy in the form of domestic trade to be ignored, its contribution to the fiscal and tax most comes from domestic consumption, this paper chose alone import and export trade, purpose is to emphasize alignment of regional finance and economy and international economy in our country, the world economic integration, don't deny that the role of domestic demand for finance and economy. Imports and exports, the article selected did not distinguish between imports and exports respectively to explain the fiscal revenue, blurring the import and export trade to optimize the role of fiscal revenue, it depends on the import and export tax breaks and leverage, so not to divide. This paper choose the GDP index does not consider the fine strokes of the first, second, third industry, did not distinguish between the industrial structure to the role of the local fiscal revenue, because its dilute the purpose of this paper to describe: import and export trade and fiscal and economic relations. Contact with accounting, main is to measure adopt trade accounting, budget accounting, economic output; Data analysis method using multiple regression, the empirical accounting method.
Show more

6 Read more

An Empirical Trade Intensity Analysis of South Africa - BRIC Economic Relations

An Empirical Trade Intensity Analysis of South Africa - BRIC Economic Relations

The idea of the BRIC (Brazil, Russia, India and China) started in 2001 but it was not until 10 years later that South Africa became involved in the activities of the group, resulting in the new acronym BRICS. The highlight of the country’s participation in the group was the hosting of the 5 th BRICS Summit in Durban, South Africa, in March 2013 where far reaching proposals such as the setting up of a development bank were put on the table. Therefore, both policy makers and analysts have been watching activities around the group with keen interest. These countries account for about 43 percent of global population, 18 percent of international trade and 25 percent of the world’s gross domestic product (GDP) in purchasing power parity terms. Besides, the relevance of the group in global economic governance has not gone unnoticed with its view that there is need for a more equitable global order, especially with respect to the running of the international multilateral institutions such as the International Monetary Fund (IMF) and the World Bank.
Show more

18 Read more

Challenges in evaluating impact of sanctions – political vs economic perspective

Challenges in evaluating impact of sanctions – political vs economic perspective

In 1990 the most cited sanctions literature was published by Hufbauer, Schott, and Elliot. These scholars moved beyond a simple qualitative research approach to a quan- titative research study of more than 100 sanctioning episodes. (Thieler, 2009, p. 154). This study became the basis for future scholars to frame their discussions on the topic. Hufbauer et al. estimated effectiveness of sanctions imposed between 1914 and 1990 using the gravity theoretical model and regression estimation technique. In original re- search, they surveyed experts and constructed a “policy result”, as well as a “contri- bution of sanctions to policy results” (all on an ordinal scale of 1–4), to measure the success or failure of economic sanctions (Shojai, Root, 2013). Also other scholars used gravity model approach, an estimation of the impact of economic negative sanctions on international trade. For example Caruso studied panel gravity estimates of bilateral trade between the U.S. and 49 target countries over the period 1960–2000, inclusive (e.g., Caruso, 2003).
Show more

14 Read more

The impact of economic sanctions on international trade : how do threatened sanctions compare with imposed sanctions?

The impact of economic sanctions on international trade : how do threatened sanctions compare with imposed sanctions?

The eect of anticipation of sanctions on trade may be inuenced by the reaction of rms and consumers to any signal of threat. To a large extent, rms that engage in international trade do not only make strategic decisions on the basis of intrinsic value as measured by price, quantity and quality of goods and services but also impor- tantly, on the basis of the political risks associated with trade and its nance ( Fuchs & Klann , 2013 ). These political risks are important determining factors for rms as international trade is not a cash and carry transaction but involves longer processes and takes time as products move across borders. One example of how political risks emanating from strained political relations could hinder international trade would be the inability of trading partners to pay for goods shipped to them because of a ban on nancial transfers as a result of economic sanctions. Sanctions may create a funda- mental problem of exchange, especially when goods are in a transit without adequate assurance that the letter of credit will be honored when the delivery conditions are met. Thus, a risk-averse exporter will be hesitant to ship products to an importer when there are possible threats or an anticipation that sanctions will be imposed on the importer country.
Show more

31 Read more

THE IMPACT OF INTERNATIONAL TRADE ON THE ECONOMIC GROWTH OF DEVELOPING COUNTRIES:
AN EMPIRICAL STUDY OF KENYA

THE IMPACT OF INTERNATIONAL TRADE ON THE ECONOMIC GROWTH OF DEVELOPING COUNTRIES: AN EMPIRICAL STUDY OF KENYA

There are direct benefits accruing to a country that is well positioned in the global market. A case in point is China, which, according to Sun (2010), has in the recent past reaped both static and dynamic benefits 2 of trade that has spurred its economic growth. The static benefits include gains derived from specialization to products that a country can produce at low costs (comparative advantage) thus improve output, affording the local consumers a chance at cheaper products through imports and economies of scale as well an improved variety. On the other hand, dynamic benefits include gains like exposure to a larger market; increased competition to serve the expanded market, accumulation of capital and technological spillovers which eventually leads to efficient production systems and reduction of unemployment.
Show more

11 Read more

Impact of International Trade on the Economic Growth of Nigeria

Impact of International Trade on the Economic Growth of Nigeria

Michaely (1977) used simple regression and correlation analysis to investigate the relationship between exports and growth. He found that in less developed countries, there was a weak correlation. He, however, raised an important issue as to determine the minimum level of development a country has to attain in order to benefit from trade. As a follow-up on Michaely (1977) work, Tyler (1981) worked on a sample of 55 developing countries. He confirmed the positive relationship between expansion of exports and increase in production. In his analysis, he observed that it is necessary for some countries to achieve a minimum level of development in order to benefit from export expansion, especially of manufactured exports. This conclusion was later supported by Jude and Pop-Silaghi (2008) in the case of Romania. Rana (1988) questioned Balassa (1985)’s finding that the contribution of exports to growth has increased in the post-1973 period compared with the pre-1973 period. He argued that Balassa’s analysis used heterogeneous samples. He used a balanced sample of 45 developing countries and found that the contribution of export, although significant but reduced in the post-1973 period. Also, some studies built on the import-growth relationship have found positive impact of import on growth especially through the impact of technology imports in the production process of developing countries (Pereira, 1996). Grossman and Helpman (1991) demonstrated the importance of imports of foreign technology in the growth process of a country. He explained that the importation of foreign equipment creates a more efficient production system, increases productive capacity, global output, technological capacity development and economic growth.
Show more

9 Read more

Impact of International Trade on the Economic Growth in Ghana

Impact of International Trade on the Economic Growth in Ghana

including the Republic of Ghana. The link between economic growth and international trade has been examined under a number of empirical studies, yet there is an absence of relevant consensus among them (Boakye and Gyamfi, 2017). While the classical economists like David Ricardo asserts that trade could have a significant impact on the countries having competitive advantage in respect of cost and opposes restriction to trade such as trade tariffs; Adam Smith argued that international trade can be beneficial for the nations having no absolute advantage in the possibilities for production (Boakye and Gyamfi, 2017). In the perspective of Piatkowski (2018) strong positive correlation was identified between the economic growth and trade as per the analysis on investment and export in Australia on a long run basis. There was an additional investigation on the economy of Poland, which established the link between economic growth and exports. The findings also emphasised that the GDP of an economy was influenced by the combined effect of export and import. United Nations Conference on Trade and Development (2007) assert that international trade serves as a catalyst for globalisation wherein the gains are distributed across nations and argue that it can serve as a useful means to channelize technological advancement to attain development. Further, empirical researches examining this correlation established linkage between investment and growth. Cypher and Dietz (2008) explain the Harrod-Domar model wherein a shortage in foreign exchange can put a check on economic growth by creating constraints on savings and imports. Another growth model was propounded by Maswood (2017), having independent and variable interplay between trade and growth on a respective basis. The outcomes of the study highlighted a robust chemistry between economic growth and trade. As micro-indicators, imports and exports can produce advance effect on the growth of the economy, which further suggests that direct impact of investments on economic growth. Spear and Young (2016) highlight that the Endogenous growth models postulate that capital accumulation can cause a rise in the trend on the rate of economic growth in the long run. Nevertheless, allowing capital accumulation is essential to raise the savings ratio. With a rise in capital stock, increase in production will lead to efficiency of labour, thereby stimulating the growth of the economy.
Show more

5 Read more

Show all 10000 documents...