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Foreign Trade Liberalisation and Economic Growth: The Case of the Republic of Srpska

Popović Goran, Erić Ognjen and Popović Srđa
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Erić Ognjen: University of Banja Luka, Faculty of Economics, Bosnia and Herzegovina
Popović Srđa: Faculty of Mediterranean Business Studies, Tivat, Montenegro

Economics, 2019, vol. 7, issue 2, 99-108

Abstract: This paper assesses the impact of trade liberalisation on the economic growth of the Republic of Srpska (RS). The aim of the research is to prove the hypothesis that trade liberalisation and export orientation positively impact on GDP growth. RS has characteristically small and open economies. The degree and character of the connections between the observed variables was determined by means of regression analysis. Regression analysis indicates that there is a positive connection between the total trade and GDP growth. Further, there is a marked positive correlation between export and GDP, that is, export growth contributes to GDP growth. Foreign trade deficit stands in a negative correlation with GDP. Lastly, regression analysis points to the connection between the Republic of Srpska economic growth and openness of its economy. However, uncontrolled opening and exposure to foreign competitiveness can also bring about problems which in certain circumstances lead to long-term macroeconomic instability.

Keywords: Liberalisation; growth; trade; export; small economies; Republic of Srpska (search for similar items in EconPapers)
JEL-codes: F10 F14 O40 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.2478/eoik-2019-0020

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