Trade liberalisation and economic growth in Zimbabwe

Abstract

Liberalisation of trade is deepening, and so have the incentive schemes put in place by a number of countries to promote it. International trade promotion agencies in developing countries are actively promoting their countries as the best, with which to trade. With international trade emerging as a favourite source of revenue and technology transfer for most countries, profound questions about the impact of trade liberalisation to economic growth are addressed in this study. The main purpose of this study is to empirically assess the relationship between trade liberalisation and economic growth in Zimbabwe using annual time series data from 1980 to 2017. Autoregressive distributed lag (ARDL) bounds testing approach to cointegration and Error Correction Mechanism (ECM) are applied in order to investigate the long run and short run impact of trade liberalisation on economic growth. The results proved the existence of a positive long-run relationship between trade liberalisation and economic growth. The study therefore concludes that policy makers and government negotiators in Zimbabwe should introduce policies that promote openness through the removal of barriers to trade and export promotion in order to promote overall growth of the economy.