Trade Agreement and Economic Growth: Evidence in D-8 Countries
Abstract
The D-8 organization was established to accelerate the economies of eight developing countries that joined the OIC, but the data showed a decline in the share of the D-8 countries towards the total GDP of developing countries. Thus, this study examines whether there are differences in economic growth between D-8 and non-D-8 countries. The tests were carried out on eight D-8 member countries and eight non-D8 countries. Using panel regression with a fixed-effect model, the study results indicate differences in economic growth between D-8 and non-D-8 member countries. These results indicate that joining D-8 made a significant contribution to its member countries. In addition, all control variables such as political stability, population, export, and human development index show a positive impact on economic growth.
JEL Classification: F13, F14, F43
How to Cite:
Arisman., Al Arif, M. N. R., & Harahap, D. (2021). Trade Agreement and Economic Growth: Evidence in D-8 Countries. Signifikan: Jurnal Ilmu Ekonomi, 10 (2), 311-324. https://doi.org/10.15408/sjie.v10i2.21457.
Keywords
References
Abu, N., Karim, M. Z. A., & Aziz, M. I. A. (2015). Corruption, Political Instability and Economic Development in the Economic Community of West African States (ECOWAS): Is There a Causal Relatioship. Contemporary Economics, 9(1), 45-60.
Agarwal, M., & Mitra, S. (2010). Role of Goverment in Trade and Investment Boom: Lessons from East Asia. Journal of Economic Policy Reform, 13(4), 285-304.
Aisen, A., & Veiga, F. J. (2013). How Does Political Instability Affect Economic Growth? European Journal of Political Economy, 29, 151-167.
Aksoy, T. (2018). Structural Reforms and growth in Developing Countries. Journal of Economic Policy Reform, https://doi.org/10.1080/17487870.2018.1424629.
Al Arif, M. N. R., Arisman., & Harahap, D. (2021) Export Political Stability, and Growth in Developing-8 Countries. Estudios de Economia Aplicada, 39(1), 117-126.
Alesina, A., Özler, S., Roubini, N., & Swagel, P. (1996). Political Instability and Economic Growth. Journal of Economic Growth, 1, 189-211.
Almasi, H. (2012). Investigating Status of Developing Eight (D8) Countries Macroeconomic Indices in line with Developing Economic Cooperation with Iran. African Journal of Business Management. 6(20), 6166-6176.
Anvari, E., Ahangari, A. M., & Jafari, E. (2020). The Role of Government Health and Education Expenditure on Economic Growth in Iran and OPEC Countries. Iranian Economic Review, 24(4), 1079-1098.
Asturias, J., Hur, S., Kehoe, T. J., & Ruhl, K. J. (2016). The Interaction and Sequencing of Policy Reforms. Journal of Economic Dynamics and Control. 72, 45-66.
Bahmani-Oskooee, M., & Oyolola, M. (2007). Export Growth and Output Growth: an Application of Bounds Testing Approach. Journal of Economics and Finance, 31(1), 1-11.
Bahramian, P., & Saliminezhad, A. (2020). On the Relationship Between Export and Economic Growth: A Nonparametric Causality in Quantiles Approach for Turkey. The Journal of International Trade and Economic Development, 29(1), 131-145.
Bakir, C., & Woo, J. J. (2016). Financial Sector Reform and Policy Design in an Age of Instability. Policy and Society. 35(3), 193-204.
Berggren, N., Bergh, A., & Bjørnskov, C. (2015). What Matters for Growth in Europe? Institutions versus Policies Quality versus Instability. Journal of Economic Policy Reform. 18(1) 69-88. https://doi.org/10.1080/17487870.2014.953159.
Chen, B., & Feng, Y. (1996). Some Political Determinants of Economic Growth: Theory and Empirical Implications. European Journal of Political Economy, 12, 609-627.
Chen, J., & Dong, B. (2012). A Non Parametric Estimation on the Effects of Import and Export Trade to Economic Growth in China. Procedia Engineering, 29, 952-956.
De Mendonça, H. F., & Nascimento, N. C. (2020). Monetary Policy Efficiency and Macroeconomic Stability: Do Financial Openness and Economic Globalization Matter? The North American Journal of Economics and Finance, 51, 100870.
Dritsaki, C. (2013). Causal Nexus Between Economic Growth, Export, and Goverment Debt: The Case of Greece. Procedia Economics and Finance, 5, 251-259. https://doi.org/10.1016/S2212-5671(13)00031-2.
Dritsaki, C., & Stiakakis, E. (2014). Foreign Direct Investment, Exports, and Economic Growth in Croatia: A Time Series Analysis. Procedia Economics and Finance, 14, 181-190. https://doi.org/10.1016/S2212-5671(14)00701-1.
Edo, S., Osadolor, N. E., Dading, I. F. (2020). Growing External Debt and Declining Export: The Concurrent Impediments in Economic Growth of Sub-Saharan African Countries. International Economics, 161, 173-187.
Elbargathi, K., & Al-Assaf, G. (2019). The Impact of Political Instability on the Economic Growth: an Empirical Analysis for the Case of Selected Arab Countries. International Journal of Business and Economics Research, 8(1), 14-22.
Febriningtyas, M., Oktaviani, R., & Rifin, A. (2018). Rules of Origin in ASEAN+1 Free Trade Agreements on Agriculture Commodity. Signifikan: Jurnal Ilmu Ekonomi, 7(1), 15-26. https://doi.org/10.15408/sjie.v7i1.6432.
Gurgul, H., & Lach, L. (2013). Political Instability and Economic Growth: Evidence from Two Decades of Transition in CEE. Communist and Post Communist Studies, 46, 189-202. https://doi.org/10.1016/j.postcomstud.2013.03.008.
Hiestand, T. (2005). Using Pooled Model, Random Model, and Fixed Model Multiple Regression to Measure Foreign Direct Investment in Taiwan. International Business and Economics Research Journal, 4(12), 37-52.
Hur, J., & Park, C. (2012). Do Free Trade Agreements Increase Economic Growth of the Member Countries? World Development, 40(7), 1283-1294.
Hye, Q. M. A., Wizarat, S., & Lau, W-Y. (2016). The Impact of Trade Openness on Economic Growth in China: An Empirical Analysis. The Journal of Asian Finance, Economics, and Business, 3(3), 27-37.
Jafari, Y., Ismail, M. A., & Kouhestani, M. S. (2011). Determinant of Trade Flows among D-8 Countries: Evidence from the Gravity Model. Journal of Economic Cooperation and Development, 32(3), 21-38.
Jaouadi, S., Arfaoui, L., & Ziedi, A. (2014). Political Instability and Growth: Case of the Developing Countries. International Journal of Social Science Research, 2(1), 19-28. https://doi.org/10.5296/ijssr.v2i1.3973.
Jin, H. J., Koo, W. W., & Sul, B. (2006). The Effects of The Free Trade Agreement Among China, Japan, and South Korea. Journal of Economic Development, 31(2), 55-72.
Jong-A-Pin, R. (2009). On the Measurement of Political Instability and Its Impact on Economic Growth. European Journal of Political Economy, 25, 15-29. https://doi.org/10.1016/j.ejpoleco.2008.09.010.
Kaplan, E. A., & Akçoraoglu, A. (2017). Political Instability, Corruption, and Economic Growth: Evidence from a Panel of OECD Countries. Business and Economic Research Journal, 8(3), 363-377. https://doi.org/10.20409/berj.2017-55.
Kartikasari, D. (2017). The Effect of Export, Import, and Investment to Economic Growth of Riau Islands Indonesia. International Journal of Economics and Financial Issues, 7(4), 663-667.
Kilavuz, E., & Topcu, B. A. (2012). Export and Economic Growth in the Case of the Manufacturing Industry: Panel Data Analysis of Developing Countries. International Journal of Economics and Financial Issues, 2(2), 201-215.
Liu, X. (2015). Trade Agreements and Economic Growth. Southern Economic Journal, 82(4), 1374-1401. https://doi.org/10.1002/soej.12113.
Mahjabeen., Shah, S. Z. A., Chughtai, S., & Simonetti, B. (2020). Renewable Energy, Institutional Stability, Environment, and Economic Growth Nexus of D-8 Countries. Energy Strategy Reviews, 29, article100484.
Manwa, F., & Wijeweera, A. (2016). Trade Liberalisation and Economic Growth Link: The Case of Southern African Custom Union Countries. Economic Analysis and Policy, 51, 12-21. https://doi.org/10.1016/j.eap.2016.05.001.
Maoz, Y. D., Peled, D., & Sarid, A. (2011). Trade Agreements, Bargaining and Economic Growth. Journal of Macroeconomics, 33, 92-101.
Mareta, B. M. T. (2018). The Impact of ASEAN-Korea Free Trade Agreements on Indonesian Export of Manufacturing Goods. Etikonomi, 17(2), 161-184.
Marwan, N. F., Kadir, N. A. A., Hussin, A., Zaini, A. A., Rashid, M. E. A., & Helmi, Z. A. G. (2013). Export, Aid, Remittance and Growth: Evidence from Sudan. Procedia Economics and Finance, 7, 3-10. https://doi.org/10.1016/S2212-5671-(13)00211-6.
Murad, M. S., & Alshyab, N. (2019). Political Instability and Its Impact on Economic Growth: the Case of Jordan. International Journal of Development Issues, 18(3), 366-380. https://doi.org/10.1108/IJDI-02-2019-0036.
Nedić, V., Despotović, D., Cvetanović, S., Djukić, T., & Petrović, D. (2020). Institutional Reform for Economic Growth in the Western Balkan Countries. Journal of Policy Modeling, Article In Press. https://doi.org/10.1016/j.polmod.2020.04.002.
Nugroho, H., Pasay, N. H. A., Damayanti, A., & Panennungi, M. A. (2019a). Institutions as the Main Determinant in Economic Growth. Etikonomi, 18(1), 13-28.
Nugroho, H., Pasay, N. H. A., Damayanti, A., & Panennungi, M. A. (2019b). Semi-Endogenous Growth Model for Developing Countries: A Modificaation to Jones Model. Signifikan: Jurnal Ilmu Ekonomi, 8(1), 121-134.
Nushiwat, M. (2008). Exports and Economic Growth a Re-Examination of the Causality Relation in Six Countries, 1981-2015. Applied Econometrics and International Development, 8(2), 5-12.
Nwosa, P. I., Tosin, F. O., & Ikechukwu, O. M. (2019). Export Diversification and Economic Growth in Nigeria. Signifikan: Jurnal Ilmu Ekonomi, 8(2), 227-234.
Okora, A. S., Ujunwa, A., Umar, F., & Ukemenam, A. (2020). Does Regional Trade Promote Economic Growth? Evidence from Economic Community of West African States (ECOWAS). Journal of Economics and Development, 22(1), 131-147.
Ortiz, J., Xia, J., & Wang, H. (2015). A VAR Model of Stimulating Economic Growth in the Guangdong Province, P. R. China. The Journal of Asian Finance, Economics, and Business, 2(2), 5-12. https://doi.org/10.13106/jafeb.2015. vol2.no.2.5.
Ostadi, H., & Shoaei, M. R. (2015). Studying Trade Potential Among the Group of Eight Developing Countries (D8) and Industrialized Nations (G8): 1990-2012. Journal of Scientific Research and Development, 2(3), 22-25.
Osterloh, S. (2012). Words Speak Louder than Actions: The Impact of Politics on Economic Performance. Journal of Comparative Economics, 40, 318-336.
Othman, J., Acar, M., & Jafari, Y. (2013). Towards OIC Economic Cooperation: Impact of Developing 8 (D-8) Preferential Trade Agreement. The Singapore Economic Review, 58(2). https://doi.org/10.1142/S0217590813500094.
Polachek, S. W., & Sevastianova, D. (2012). Does Conflict Disrupt Growth? Evidence of the Relationship Between Political Instability and National Economic Performance. The Journal of International Trade & Economic Development, 21(3), 361-388. https://doi.org/10.1080/09638191003749783.
Radu, M. (2015a). The Impact of Political Determinants on Economic Growth in CEE Countries. Procedia Social and Behavioral Sciences, 197, 1990-1996.
Radu, M. (2015b). Political Stability – a Condition for Sustainable Growth in Romania? Procedia Economics and Finance, 30, 751-757.
Robinson, J. A. (1998). Theories of Bad Policy. The Journal of Policy Reform, 2(1), 1-46.
Sermcheep, S. (2019). Services Export and Economic Growth in ASEAN Countries. Journal of Asian Economic Integration, 1(2), 163-182.
Shafiullah, M., Selvanathan, S., & Naranpanawa, A. (2017). The Role of Export Composition in Export-Led-Growth in Australia and Its Regions. Economic Analysis and Policy, 53, 62-76. https://doi.org/10.1016/j.eap.2016.11.002.
Statistical, Economic, and Social Research and Training Centre for Islamic Countries [SESRIC]. (2016). ¬D-8 Economic Outlook 2016/2017. Ankara: SESRIC.
Sujianto, A. E., Pantas, P. E., Mashudi. Pambudi, D. S., & Narmaditya, B. S. (2020). The Journal of Asian Finance, Economics, and Business, 7(11), 127-135.
Szkorupova, Z. (2014) A Causal Relationship Between Foreign Direct Investment, Economic Growth, and Export for Slovakia. Procedia Economics and Finance, 15, 123-128. https://doi.org/10.1016/S2212-5671(14)00458-4.
Tabassam, A. H., Hashmi, S. H., & Ur Rehman, F. (2016). Nexus Between Political Instability and Economic Growth in Pakistan. Procedia Social and Behavioran Sciences, 230, 325-334. https://doi.org/10.1016/j.sbspro.2016.09.041.
Tang, C. F., & Abosedra, S. (2019). Logistics Performance, Exports, and Growth: Evidence from Asian Economies. Research in Transportation Economics, 78, 1-9.
Tang, C. F., Lai, Y. W., & Ozturk, I. (2015). How Stable is the Export-Led Growth Hypothesis? Evidence from Asia’s Four Little Dragons. Economic Modelling, 44, 229-235. https://doi.org/10.1016/j.econmod.2014.09.022.
Uddin, M. A., Ali, M. H., & Masih, M. (2017). Political Stability and Growth: an Application of Dynamic GMM and Quantile Regression. Economic Modelling, 64, 610-625. https://doi.org/10.1016/j.econmod.2017.04.028.
Wardani, M. A., Mulatsih, S., & Rindayanti, W. (2018). Competitiveness and Factors Affecting Indonesian Food Industry’s Export to Regional Comprehensive Economic Partnership. Etikonomi, 17(2), 185-198.
Widyastutik., Nazara, S., Oktaviani, R., & Simarmata, D. (2017). Trade Barrier Elimination, Economics of Scale, and Market Competition: Computable General Equlibrium Model. Signifikan: Jurnal Ilmu Ekonomi, 6(2), 189-216.
Yee Ee, C. (2016). Export-Led Growth Hypothesis: Empirical Evidence from Selected Sub-Saharan African Countries. Procedia Economics and Finance, 35, 232-240.
Zafar, K. M. (2020). ARDL-Analysis of the Relationship among Exports, FDI, Current Account Deficit, and Economic Growth in Pakistan. Iranian Economic Review, 24(2), 393-414. https://doi.org/10.22059/IER.2020.76010.
Zaman, K., Khan, H. U. R., Ahmad, M., & Aamir, A. (2018). Research Productivity and Economic Growth: A Policy Lesson Learnt from Across the Globe. Iranian Economic Review, 22(3), 627-641.
DOI: 10.15408/sjie.v10i2.21457
Refbacks
- There are currently no refbacks.
