Empirical Verification of Dynamic Dependences Between Productivity and Economy Openness. The Case of Visegrad Countries
DOI:
https://doi.org/10.24917/20833296.12.11Keywords:
co-integration, market openness, productivity, stationary, VECMAbstract
This study analyses one of the main postulates of the Endogenous Growth Theory, that suggests that international trade openness is capable to speed up growth-impacting productivity. ADF stationary tests, Johansen co-integration test and Vector Error Correction Model (VECM) procedures are applied on a yearly data set covering the period 1995-2014. Data for individual V4 countries were also compared with EU-15 benchmark. The main finding of the paper is that for all V4 countries there exists a long term relationship between economy openness and labour productivity and in case of Hungarian economy in the Granger sense - causality is one-directional and runs only from productivity to openness. It suggest, that the Endogenous Growth Theory in this case is no longer supported nevertheless further and deeper investigation is needed. Although huge differences in case of openness between V4 countries exist, strong positive linear correlation with productivity is observed. Also disturbing secondary result of conducted research is that however convergence in case of productivity between V4 and EU-15 is observed, assuming the current rate of catching-up (apart from existence of saturation level of productivity), EU-15 and V4 average productivity would equal in 6 decades.References
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