Trade Openness, Economic Growth and Competitiveness. The Case of the Central and Eastern European Countries

This article examines the effects of trade openness on the economic growth and competitiveness of Central and Eastern European countries (CEEs). Although CEEs are characterised by high indicators of trade openness, they show rather different trends of economic development and competitiveness. In most CEEs, trade policies are oriented towards regional trade cooperation with an explicit aim of integration in global economics. The empirical research was conducted on the basis of the panel data for 11 CEEs over the period 2000 to 2014 by applying correlation analysis. Granger-causality test and vector autoregression (VAR) model. This methodological framework allows to test the direct causality relations among trade openness, economic growth and competitiveness, and enables to distinguish between short-run and long-term effect. The research results have confirmed the empirical interdependence among the triad components - trade openness, economic growth and competitiveness, i.e. it has been established that economic growth leads to the improvement of trade openness, while competitiveness of the CEE region leads to the improvement of economic growth, which has obviously disclosed the validity of the theoretical insights. Granger-causality test as well as the developed VAR model have revealed that economic growth has a long-lasting effect on trade openness, while the indicators of competitiveness have a long-lasting effect on GDP per capita in CEEs.