The Effect of Trade Openness on Economic Growth: Albanian Case

Abstract

The main purpose of this study is to evaluate and determine the effects of trade liberalization on the economic growth in Albania. The factors included in this project are, foreign direct investment (FDI), exchange rate, and trade openness. Trade openness was computed as the ratio of total of imports and exports to total exports. The methodology comprises the use of the above mentioned macroeconomics indicators which are all gathered by official institution database for an interval time of 10 years measured in quarterly bases’. Secondly a macroeconomic model will be performed in order to understand the impact and relationship of trade openness on economic growth (GDP). Finally based on the result from the statistics of all panel models, it is showed that trade openness and exchange rate has a significantly positive impact on economic growth.

DOI: 10.5901/ajis.2014.v3n3p193