The Impact of Trade Liberalization on Economic Growth in Iraq: An Empirical Analysis

Abstract

Trade liberalization is known to be a driving force for countries’ growth. Many countries around the world have started opening their borders to trade in the hope of promoting economic growth. Recently, several developing countries have taken a huge step forward towards trade liberalization. The current research attempts to analyze the impact of trade liberalization on economic growth in Iraq. In doing so, this study incorporates gross fixed capital formation (GFCF), human capital (HC), population growth (PG) and oil price (OP) as variables to form a multivariate framework. The study applied the autoregressive distributed lag approach (ARDL) with time series data from 1990 to 2020.

The empirical findings indicate that trade liberalization has a positive and significant impact on economic growth in Iraq in the short run and long run. Therefore, this study recommends that the country should consider diversification of its export sector. Also, there is a need for Iraq to develop strong initiatives for adding value to exports so as to compensate for the level of imports.