The impact of economic openness on the economic growth of Central and Eastern European countries after the systemic transformation

Abstract

Objective: The objective of the article is to examine the impact of foreign trade on economic growth in countries opening up their economies as a result of their separation from the blocs of socialist countries.

Research Design & Methods: The study is quantitative. Pearson’s linear correlation method and a simple linear regression model were used. The study used macroeconomic data for 1995-2022 for eight countries in Central and Eastern Europe (CEE).

Findings: In most of the studied countries, a strong positive relationship was observed between the volume of foreign trade and the rate of economic growth.

Implications & Recommendations: Restructuring the economy and opening up to international trade were important factors in the dynamic economic growth of the CEE countries studied. The observed strong positive relationship between the volume of foreign trade and the economic growth of the countries studied suggests that to stimulate a country’s economic growth, policymakers should pursue policies that support international trade. The findings may also be useful for economic theory, as it has been empirically verified that opening a country to the free flow of goods and services is correlated with its faster economic growth.

Contribution & Value Added: The novelty of the article stems from the fact that it has not yet been examined whether the exit of the Central and Eastern European countries from the bloc of socialist states, which involved the liberalization of trade regulations and opening to international trade, followed by their joining the European Union on May 1, 2004, and becoming part of the single market, significantly affected the economic growth of these countries.

Keywords

foreign trade, economic openness, economic growth, Central Europe, European Union

Author Biography

Jakub Garncarz

Research and teaching assistant at Krakow University of Economics, Department of International Trade at College of Economics and Finance. His research interests include international entrepreneurship and Artificial Intelligence.

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