The Impact of Trade Openness on the Balance of Payments in Iraq An Applied Study Using the ARDL Model for the Period 2004-2019

Abstract

The indicator of trade openness is very high during the study period, and that the Iraqi economy depends heavily on the outside to provide what it needs from manufactured goods, and it depends on the outside in the disposal of its production of crude oil, which constitutes (98%) of the total exports, and the Iraqi balance of payments achieved a surplus for most The study period, with the exception of 2009 and (2014-2017), which achieved a deficit due to the decline in crude oil prices. for measuring the correlation between the variables, the ARDL model was applied in order to show the extent of the impact of trade openness on the balance of payments, and to show the existence of long-term co-integration between trade openness and the balance of payments, due to the error correction of the parameter is negative and significant statistically in the level grade (5%), since the factor of error correction represents the speed of adaptation among the long and short terms, where, needs that it be signal of negative and significant for providing proof having a long term relationship, and within the results, the value of the error correction seems to be meaningful and takes negative of value, that is, deviations in the term of short are fixed in the term of long to set the equilibrium, which indicates that the balance is fixed within (32%) of time, and the long-term parameters indicate the significance of the relationship from the level of (1%), also The existence of a positive relationship between the balance of payments and trade openness, which is consistent with the content of the economic logic. The rise in trade openness by one unit results in an increase in the net balance of payments by 562 and vice versa.