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

Author

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  • Popović Goran
  • Erić Ognjen

    (University of Banja Luka, Faculty of Economics, Bosnia and Herzegovina)

  • Popović Srđa

    (Faculty of Mediterranean Business Studies, Tivat, Montenegro)

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.

Suggested Citation

  • Popović Goran & Erić Ognjen & Popović Srđa, 2019. "Foreign Trade Liberalisation and Economic Growth: The Case of the Republic of Srpska," Economics, Sciendo, vol. 7(2), pages 99-108, December.
    • Handle: RePEc:vrs:econom:v:7:y:2019:i:2:p:99-108:n:9
    DOI: 10.2478/eoik-2019-0020
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    References listed on IDEAS

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    More about this item

    Keywords

    Liberalisation; growth; trade; export; small economies; Republic of Srpska;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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