The Impact of Foreign Trade on Economic Growth in Yemen During the Period 1990-2020

Abstract

This study aimed to measure the impact of foreign trade on economic growth in Yemen during the period 1990-2020. The study relied on a quantitative approach to assess the effects of both exports and imports, as well as the degree of trade openness, on economic growth in Yemen. The findings of the study indicate a long-term causal relationship from exports, imports, and trade openness to economic growth. There is a short-term causal relationship between economic growth and both exports and trade openness.

Exports have a significant positive impact on economic growth, where an increase in exports by 1% leads to an improvement in the economic growth rate by 0.34%. Imports also have a significant positive effect on economic growth, with a 1% increase in imports resulting in a 0.59% improvement in the economic growth rate. This suggests that imports are mostly capital goods that contribute to increasing the productive capacity of the Yemeni economy.

However, trade openness has a significant negative impact on economic growth, as a 1% increase in the degree of trade openness leads to a decline in the economic growth rate by 1%.