Open Access
Article
SciPap-1087
Terms of Trade and Industrialization: Case of Economies with Manufacturing Exports
1 Department of Innovation and Investment Management, Taras Shevchenko National University of Kyiv, 64/13, Volodymyrska Street, Kyiv 01601, Ukraine
2 Economic Cybernetics Department, Taras Shevchenko National University of Kyiv, 64/13, Volodymyrska Street, Kyiv 01601, Ukraine
3 Department of Enterprise Economy and Management, Academy of Labour, Social Relations and Tourism, 3-A, Kiltseva Doroga, Kyiv 03187, Ukraine
4 Department of Mathematical Economics and Econometrics, Ivan Franko National University of Lviv, 1, Universytetska Street, Lviv 79000, Ukraine
* Authors to whom correspondence should be addressed.
Abstract: The paper explores the macroeconomic effect of industrialization on terms of trade and economic growth for economies with prevailing manufacturing exports. We tested such hypothesis as influence of terms of trade adjustment annual growth on manufacturing added value annual growth in economies with manufacturing exports and vice versa; influence of terms of trade adjustment annual growth and manufacturing added value annual growth on GDP per capita growth in economies with manufacturing exports. In the research we used annual data of GDP per capita (annual %), manufacturing, value added (annual %) and terms of trade adjustment (annual %) in 2008-2018 for 51 countries with manufacturing export. For this purpose we estimated vector autoregression model for panel data. Analysis of impulse response functions shows that the positive shock in manufacturing value added growth leads to slight increase in terms of trade adjustment growth in the second year and further stabilization in the seventh period. In turn, shock in terms of trade adjustment growth provokes smaller upsurge in manufacturing value added growth than in previous case. At the same time, shock in manufacturing value added growth results in gross national product per capita growth increase and its further stabilization in three years term. In addition, gross national product per capita growth reacts to shock in terms of trade adjustment growth by slight rising.
Keywords: Economic Growth, Terms Of Trade, Industrialization, Panel Var Model, Manufacturing Value Added Growth
JEL classification: F14 - Empirical Studies of Trade, F43 - Economic Growth of Open Economies, O14 - Industrialization • Manufacturing and Service Industries • Choice of Technology
Received: 20 May 2020 / Revised: 18 June 2020 / Accepted: 23 June 2020 / Published: 10 July 2020
