INTERDEPENDENCE OF FOREIGN TRADE AND THE ECONOMIC GROWTH OF SERBIA

Abstract

From the 1990s to this day, taking into account
the increasing volume of international trade around the
world, a large number of studies have emerged with the
relationship between economic growth and foreign trade as
their research subject. Most of these studies have shown that
trade liberalization positively correlates with economic
growth and productivity growth in developing countries. The
aim of this research is to determine the interdependence
between the changes of the gross domestic product and the
foreign trade of Serbia in the period from 2000 to 2019. A
vector autoregressive (VAR) econometric model and a
vector model with error correction (VECM) were used in the
research. Additionally, the paper tested the causality
between the observed variables, performed an innovative
analysis, together with an analysis of the variance
decomposition. The results of the research showed the
existence of a long-term connection between the changes in
the share of imports and exports in the GDP and the
development of the GDP in Serbia. In the long run, the share
of imports correlates negatively with the GDP, while the
share of exports positively correlates with GDP trends.