The role of exports and trade conditions in the country with a resource dependency
Importance The article analyses the influence of the external sector indexes on the Russian GDP growth. Objectives The article aims to assess the extent to which exports, oil prices and terms of trade impact the economy growth rate, as well as the impact the direction based on the co-integration analysis. Methods For the analysis, we have presented a statistical overview of the dynamics of foreign trade indexes over the past decade, and calculated the trade conditions index. We provided an econometric analysis of the mutual relationship of indicators: GDP growth, export volume, trade conditions and oil prices within a vector error correction models (VECM). We consider two model specifications as per quarterly and annual data, and made enquiry of cause-and-effect relationship (causality as per the Granger causality) between the time series. As a result of testing of hypotheses based on the dependence of GDP growth on other factors, we have identified the positive and also short-term and long-term dependences on an index from export, oil price index numbers, as well as the long-term dependence on trade conditions. Results The findings confirm the high dependence of the country’s economy on an external factor and the export growth hypothesis. Conclusions and Relevance Thus, export, and foreign trade in general, serve as the source of the country’s economic growth, and it is important to consider the external factor, when building economic growth projections, and the country’s economic policy modelling.