Effects of Trade Openness on Economic Growth in the stern Balkans Countries in Time of Crises – Empirical EvidenceEffects of Trade Openness on Economic Growth in the stern Balkans Countries in Time of Crises – Empirical Evidence
Effects of Trade Openness on Economic Growth in the stern Balkans Countries in Time of Crises – Empirical Evidence

Author(s): Shiret Elezi, Marija Midovska Petkovska, Milena Boshkoska Klisarosi
Subject(s): Social Sciences
Published by: Udruženje ekonomista i menadžera Balkana
Keywords: GDP; COVID-19; FDI; WB countries; Trade; Panel data
Summary/Abstract: This research aims to analyze the effects of trade openness on economic growth in Western Balkans Countries. The empirical analysis of this study consists on 22-year frame using panel data for the period from 2000-2022. Due to this period, the world faced several crises among which the biggest crises in the last 100 years: The Global Financial Crisis of 2007-2009, and the Pandemic COVID -19. The empirical model provides control variables such as the initial level of income per capita, human capital, gross capital formation, FDI, and unemployment rate. Economic growth is a dependent variable on trade openness. The estimation results indicate that the positive effects of trade openness on growth towards regional cooperation and with the EU countries are conditioned by the initial income per capita and other explanatory variables. Moreover, trade openness is more beneficial to countries with higher levels of initial income per capita, lower fiscal deficit, and higher FDI. The financial crisis indicated a significant decline in GDP per capita, along with the negative impacts on trade openness and FDI. The COVID crisis indicated a higher deficit and lower GDP and smaller trade openness.

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