Foreign Trade and Demand-Driven Growth: The Case of Three Eastern European Countries

Stela Raleva, Ilia Atanasov and Lidia Kabatliyska-Andonova

Economic Studies journal, 2026, issue 4, 22-40

Abstract: The paper studies the relationship between foreign trade and economic growth in Bulgaria, Estonia and Lithuania for the period 2000-2023 in the framework of post-Keynesian theoretical models. Main tasks are to examine the impact of exports, imports and net exports on the dynamics of GDP, to highlight its peculiarities over time and across countries, and to characterise the main determinants of exports and imports for the three countries overall. The research methodology includes the use of descriptive analysis of the dynamics in GDP and in exports, imports, trade openness and net exports, the interdependencies between them and their links to changes in domestic demand, as well as the econometric analysis of the exports and imports functions using R Statistics panel data tools. The empirical results show that trade openness has been trending upwards, with the greatest growth impact coming from increased exports. The econometric estimation of the exports function with the first difference estimator reveals a positive impact of EU GDP and a negative impact of real effective exchange rate, while that of the imports function indicates a positive impact of own GDP and a negative impact of real effective exchange rate. The dynamics of economic activity are highly sensitive to the performance of major trading partners, but there is also a significant external crowding-out effect. However, the rise in imports was constrained by the non-typical impact of increasing relative prices, contributing to an upturn in net exports and higher economic growth.

JEL-codes: C23 E12 F10 O19 O40 (search for similar items in EconPapers)
Date: 2026
References: Add references at CitEc
Citations:

Downloads: (external link)
http://archive.econ-studies.iki.bas.bg/2026/2026_04/2026_04_02.pdf

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bas:econst:y:2026:i:4:p:22-40

Access Statistics for this article

More articles in Economic Studies journal from Bulgarian Academy of Sciences - Economic Research Institute Contact information at EDIRC.
Bibliographic data for series maintained by Diana Dimitrova ().