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Economic openness versus economic growth: a correlation study in long-term and short periods based on a selection of European Union countries
Sylwia Machowska-Okrój
Abstract
ABSTRAKT
Objective: The objective of this paper is to show the connection between economic openness with economic growth and attempt to answer the following question: Did the accession to EU had any affect on correlation between economic growth and the economic openness?
Research Design & Methods: The research method adopted here was a study of correlation among the variables. Program "Statistica" have been used to study this correalation. Economic growth plays the role of a dependent variable and is estimated according to GDP. An economy’s openness is an independent variable and is estimated by the openness factor calculated using this formula: the sum of exports and imports divided by GDP.
Findings: Not all research agrees with the idea of the positive influence of openness in the economy on economic growth. In 2004, the former ‘Eastern Bloc’ countries (Czech Republic, Estonia, Hungary, Lithuania, Latvia, Poland, Slovak Republic, Slovenia) joined the European Union, offering an opportunity to study the effects of accession.
Implications & Recommendations: The study has been divided into two phases. The first phase examines the relation between the economic growth rate and the openness factor for the 24 countries which were members of the EU in 2004. The results show a positive correlation between the studied variables.
Afterwards, each of the eight listed countries were researched concerning two time periods: the first from before their accession to the EU and the second after their accession to the EU. Correlation research does not satisfactorily settle this aspect.
In the second phase of the study, a longer time horizon was allowed and the former Eastern Bloc countries were researched again. The results were explicit and credible. A positive and statistically substantial correlation for the researched countries was achieved.
Contribution & Value Added: On the basis of the conducted research the following conclusions were drawn.
- An analysis of the correlation between economic growth and economic openness shows a positive dependency with the following assumptions: the researched group consists of the 24 EU countries in 2004 and the research is done within the 2004-2015 period.
- The twice-run correlation research for the time periods 1995-2004 and 2004-2015 respectively and for the eight selected countries does not present explicit results. Consequently, it cannot be concluded that accession to the EU has positively influenced the correlation between economic growth and economic openness.
- The correlation research for 1995-2015 and the eight selected countries do confirm the popularity of the idea of the positive influence of the economic openness on economic growth.
Keywords
Economic growth ; economic openness factor ; correlation research ; positive dependency ;
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