Hana Fitzová,

Faculty of Economics and Administration, Masaryk University, Brno, Czech Republic,

hana.fitzova@econ.muni.cz

IMPACT OF TRADE ON ECONOMIC GROWTH IN THE CZECH AND SLOVAK REPUBLICS

Libor Žídek,

Faculty of Economics and Administration, Masaryk University, Brno, Czech Republic,

zidek@econ.muni.cz

ABSTRACT. This paper examines the relationship between trade and economic growth in the Czech and Slovak Republics. The situation after the Velvet revolution in 1989 is discussed at first. The change of the structure of the trade and the orientation of the trade in both republics are explained and illustrated on available data.

The empirical part proved an analysis of the relationship between trade and GDP growth, using econometric analysis. Theory of cointegration, the vector error correction model and Granger causalities are employed. A long-term equilibrium among the investigated variables is identified in both countries. The empirical findings also indicate important role of exports in the economic growth in both republics. We conclude that economic growth in both of the countries can be identified as export-led.

Received: April, 2015

1st Revision: June, 2015

Accepted: July, 2015

DOI:10.14254/2071- 789X.2015/8-2/4

JEL Classification: F15, C32    

Keywords: Czech    and      Slovak trade,   export-led growth, cointegration, VAR model.