Liza Alili SULEJMANI, PhD International Balkan University, Faculty Of Business and Administrative Sciences, Macedonia Afrim ALILI, PhD University Of Tetovo, Faculty Of Economics, Macedonia
Abstract Having into consideration therecent awareness of the significant role of trade openness and Foreign Direct Investments on country’s economic growth, main objective of this paper is to analyze this nexus in the case of Republic of Macedonia as a small open economy, covering time spin 2000q1 – 2016q4. Firstly, Augmented Dickey Fuller test is accomplished to test the time series stationarity, while Johansen test for co-integration is conducted for determining the existence of co-integration vector in the model. Finally, VECM it is employed in order to reveal the long-run relationship among FDI, Trade openness and economic growth in the case of Republic of Macedonia. In addition, empirical results of Johansen co-integration test and VECM suggest significant long-run relationship among these variables, thus revealing positive relationship between trade openness and economic growth, while negative among FDI and real GDP. Further, Granger causality test results indicate bidirectional causal relationship between trade openness and real GDP, while in the case of FDI and real GDP is present a unidirectional causality, running from FDI to real GDP.
InTraders International Trade Academic Journal Broadcast range: July-December The journal's main subject is international trade. For 2024 and beyond, it accepts economy-based studies outside international trade and original studies on tourism issues. Manuscript language: English (Should not include abstracts in languages other than English. ). https://dergipark.org.tr/en/pub/intraders
