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Effects of Services on Economic Growth in Albania: An ARDL Approach

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  • Adelajda Matuka
  • Shuffield Seyram Asafo

Abstract

Using annual data for the period 2000–2018, the study employed an autoregressive distributed lag (ARDL) methodology to examine the long-run cointegrating relations between service subsectors and economic growth in Albania. Results are presented both for the short run and long run. Findings indicate that the transport sector, communication and financial services have a positive impact on economic growth. However, the manufacturing sector has a negative impact. This confirms Baumol’s theory on cost disease but does not corroborate Kaldor’s theory. Furthermore, agriculture and industry stimulate the Albanian economy whilst expenditure on health have a limited impact. In addition, the Granger causality test indicates a bidirectional causality from transport, communication and financial services to GDP per capita. Lastly, our models are robust to all the conventional battery of tests.

Suggested Citation

  • Adelajda Matuka & Shuffield Seyram Asafo, 2021. "Effects of Services on Economic Growth in Albania: An ARDL Approach," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 30(6), pages 856-881, August.
    • Handle: RePEc:taf:jitecd:v:30:y:2021:i:6:p:856-881
    DOI: 10.1080/09638199.2021.1910723
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    Cited by:

    1. Tomas Kliestik & Alena Novak Sedlackova & Martin Bugaj & Andrej Novak, 2022. "Stability of profits and earnings management in the transport sector of Visegrad countries," Oeconomia Copernicana, Institute of Economic Research, vol. 13(2), pages 475-509, June.

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