EMPIRICAL RESEARCH OF THE EFFECT OF TERMS OF TRADE ON THE ECONOMIC GROWTH IN DEVELOPING COUNTRIES

According to traditional economic theories, the improvement of terms of trade is likely to promote economic growth. This paper offers an empirical analysis of how the change of terms of trade is affecting economic growth based on the parallel panel data collected from 25 developing countries between 1980 and 2013. Finally, it draws the conclusion that the stimulation of deteriorated terms of trade on the economic growth of developing countries (which is to the contrary of traditional economic theories) is fading away along with the increase of economic growth and economic openness, and the frequent and dramatic change of terms of trade is harmful for economic growth.