The Effect of Trade Openness on GDP Growth in Congo

Abstract

The objective of this paper is to analyze the effect of trade openness on GDP growth in Congo. To this end, an economic analysis based on Autoregressive distributed lag model (ARDL) and annual data covering the period 1979 to 2019 have been used. The results show that trade openness has a positive effect on economic growth in Congo. Foreign direct investment (FDI), which is important for technology transfer, has no effect on GDP growth. The low level of human capital in the Congo may have contributed to this lack of effect of FDI exerting a long-term depressive effect of investment (GFCF) on economic growth. Another interpretation is that the gains from trade or the benefits of trade openness are higher for more educated populations. As a result, in a country where the oil industry (which is highly capital-intensive) accounts for 45% of GDP, policy implications have been formulated to strengthen education and R & D in order to reap the full benefits of trade openness.