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60Oriental Renaissance: innovative, VOLUME 11 ISSUE 2
educational, natural and social sciences Q ISSN 2181-1784
THE IMPACTS OF INTERNATIONAL TRADE AND FINANCIAL DEVELOPMENT ON ECONOMIC GROWTH WITH PARTICULAR REFERENCE TO AFGHANISTAN
Lajmeer Afghanzai ibn Bazmeer
Second year economy master student of Termez state university Email:[email protected]
Abstract: This article describe the developing countries have long been frustrated with international trade ties if the world market is operating against them. These developing countries have found a low rate of making significant benefits from international trade. There are numerous theories and ideas in foreign exchange and their roles in developing countries' economic growth. Some believe that international trade accelerates industrialized countries and, in fact, hinders the development of developing countries. Developing countries claim that the proportion of trade in this century has recently returned to their detriment. This claim means that their exports' price is continuously declining compared to the cost of their imported goods.
Key words: developing countries, international trade, Afghanistan, export, import.
Annotatsiya: Ushbu maqolada, rivojlanayotgan davlatlarning jahon bozor iqtisodiyotiga kirib borishi va u yerdagi raqobat bozor iqtisodiyotini yaratish nazariyalari tahlil qilib o'tilmoqda. Ushbu rivojlanayotgan mamlakatlar xalqaro savdodan sezilarli foyda olishningpast ko'rsatkichlarini topdilar. Valyutada ko'plab nazariyalar va g'oyalar mavjud bo'lib, ularda rivojlanayotgan mamlakatlarning iqtisodiy o'sishidagi roli. Ba'zilar xalqaro savdo sanoat rivojlangan mamlakatlarni tezlashtiradi va aslida rivojlanayotgan mamlakatlarning rivojlanishiga to'sqinlik qiladi, deb hisoblashadi. Rivojlanayotgan mamlakatlar ushbu asrdagi savdo ulushi yaqinda o'z zarariga qaytganini da'vo qilmoqda. Ushbu da'vo, ularning eksport narxlari import qilinadigan tovarlar narxiga nisbatan doimiy ravishda pasayib borishini anglatadi.
Kali tso'zlar: Rivojlanayotgan Mamlakatlar, Xalqaro savdo, Afg'oniston, Eksport, Import.
Аннотация: В этой статье описывается, как развивающиеся страны уже давно разочарованы в международных торговых связях, если мировой рынок действует против них. Эти развивающиеся страны обнаружили низкие темпы получения значительных выгод от международной торговли. Существует множество теорий и идей относительно иностранной валюты и
их роли в экономическом росте развивающихся стран. Некоторые считают, что международная торговля ускоряет развитие промышленно развитых стран и фактически препятствует развитию развивающихся стран. Развивающиеся страны заявляют, что доля торговли в этом столетии недавно вернулась в их ущерб. Это утверждение означает, что их экспортная цена постоянно снижается по сравнению со стоимостью их импортных товаров.
Ключевые слова: развивающиеся страны, международная торговля, Афганистан, экспорт, импорт.
Studies have shown that developing countries have long been frustrated with international trade ties if the world market is operating against them. These developing countries have found a low rate of making significant benefits from international trade. There are numerous theories and ideas in foreign exchange and their roles in developing countries' economic growth. Some believe that international trade accelerates industrialized countries and, in fact, hinders the development of developing countries. The global trade system illustrates that much of it operates between developing nations. It can be said that manufactured products are typically exported from developed countries to developing countries. Still, a significant proportion of food and raw materials are exported from these developed countries to developing countries simultaneously. Suppose developing countries produce raw materials and developed countries trade in industrial goods. In that case, it becomes clear that all the dynamic benefits of industry and work belong to developed countries, and developing countries are considered more and more fragmented and underdeveloped. It is industrial, and the developing owners are mainly agricultural.
Developing countries claim that the proportion of trade in this century has recently returned to their detriment. This claim means that their exports' price is continuously declining compared to the cost of their imported goods.
As this study had discussed the correlation between developed and underdeveloped countries in the context of international trade and financial institution aspects, so, therefore, considering Afghanistan as an opening of new transit routes has boosted trade; the growth of trade between Afghanistan and Central Asian countries has more than doubled in recent years, and economic indicators show that the numbers of trade exchanges between Afghanistan and the rest of Central Asia and more particularly with India are growing rapidly and steadily.
INTRODUCTION
"The figures from Afghanistan's exports indicate that in 2016, the country's exports grew by thirty percent at present. The joint chambers of Afghanistan and Central Asia countries are active, and the Aqina port is most demanding than any other port in Afghanistan. Turkmenistan is currently among the main trading and transit partner in Central Asia" [5].
In the past, Afghanistan suffered heavy pressure because of taking advantage of only one commercial corridor. Unfortunately, these pressures have always been increasing due to Afghanistan's growing political problems with the neighboring countries, even though it has imposed more stringent rules and regulations on Afghan people in business and trades in recent years. Continued pressure on Afghanistan's economy and employment has further boosted other business corridors, including Chabahar port, the air Corridor with India, and promoting the Middle East's routes and ports.
The volume of Afghanistan's exports to the near and far-flung countries shows that transit policies have effectively resulted. No government can now press Afghanistan on transit and import of goods [6]. Although the trade balance of the country so far reflects a significant impedance in terms of implications relative to exports, with the implementation of good industrial, commercial and transit policies, over time, it is possible to establish a reasonable balance between these two essential factors "Balance and economic stability".
All these promises to be a fruitful and effective transit trade for importing goods and the Export of goods to other countries of the world and will lead to economic growth and development. Afghanistan is at a strategic location, which can act as an Important corridor in Asia and connect powerful industrial economies such as India and China to northern Asia and Europe via dry roads and vice versa through the Lapis Lazuli Corridor [12]. Afghan President Mohammad Ashraf Ghani addresses a joint meeting of the U.S. Congress, "We are an old country with a proud heritage and a history of trade with our neighbors. We have had a bill of exchanges for at least 2,000 years. And our women could write two and a half thousand years ago. For at least three millennia, we have been a hub for the caravans and trade networks that spread across Asia, bringing Chinese silk and Indian textiles to ancient Rome and Renaissance Italy. The 19th century disrupted this world as it did in so many other places. Afghanistan became an isolated buffer, caught between two expanding empires.
The emergence of the Soviet Union further isolated our country, culminating in the 1979 invasion and the subsequent war of resistance. Today, however, the isolation
is over. First, awareness is growing; Afghanistan is quite literally the heart of Asia. Asia cannot become a continental economy without us. Asia in the next 25 years will have its 1869 moment, the year that east and west coast of the United States were joined through the transcontinental but this completion of the new interconnected Asia cannot happen without us.
Diplomatic efforts to advance integration and free hub cross-border trade and support, multicounty investments in energy, transport, and water. We envision Afghanistan that, within 20 years, become a hub of trade in gas pipelines, power transmission lines, railways, modern telecom, and banking services. We are engaging people across Asia for trade. A vast region that extends from India to beyond. We are making headway in the corridor that will link us to Georgia, Turkey, and Europe into reality. We are determined to become the Asian Development roundabout in the platform for the peaceful cooperation of our civilization."[8] Further, he declared, "as we look to our neighbors in the South and Central Asia, we are simultaneously strengthening national, global, and regional connectivity and Afghans will again become a multi-faceted hub in the 21st century. Economists carried out many studies related to the economic growth and development of different nations, and they have adopted various strategies and methods. Their studies used Foreign Direct Investment (FDI), Inflation, Investment, Saving, Human Capital, Physical Capital, Government Expenditure, Official Development Assistance (ODA), Exchange Rate, Reserves, and other variables to examine the impact, cause, and influence on economic growth.
Concept and Definitions of International Trade. A systematic review of literature reflected that trade plays a pivotal role in the economic growth of developed and developing countries. They claim that International marketing has the potential to change the economic structure. Besides, it affects the whole economy through international and regional markets, technology, and resources. Moreover, as the economy grows day by day, the relationship and influence of international trade and economic growth need to be discussed (Ashrifi, 2020).
Afghanistan is an ancient country that has the potential to trade with different nations. The Afghanistan trade relationship with the region goes back centuries. Afghanistan, located in the middle of two overpopulated and civilized nations, and Afghans were acquainted with Silk Road. The Silk Road was the hub for economic, culture, politics, and religious interaction and connected east to the west from centuries before Christ to modern history. Moreover, the Afghanistan trade includes 156 export items to 62 countries with a total amount of 875 million dollars and 331
LITERATURE REVIEW, DISCUSSION
import items from 104 countries with an unlimited amount of 7406 million dollars in FY 2018. (World Integrated Trade Solution, 2018)
Afghanistan exports items are mostly agriculture products, medical plants, mines and minerals, precious and semi-precious gems, carpet, and handicrafts. At the same time, the import of Afghanistan encompasses almost everything from food to clothes, petroleum, medicine, capital goods, and construction items. Besides, the gap between exports and import is huge and reached (-6531.38) million-dollar deficit in the trade balance.
Trade and Economic Growth in Afghanistan. Afghanistan is an ancient country that trades with different countries, nations, and emperors that go back centuries. Afghanistan was in the middle of two overpopulated and civilized nations, and Afghans were acquainted with Silk Road. The Silk Road was the hub for economic, culture, politics, and religious interaction and could connect east to the west from centuries before Christ to modern history.
Now, Afghanistan, as the heart of Asia, has 156 products with 62 export partners exporting (875.18) million USD and imports 331 products (7,406.56 million USD value) from 104 import partners. (World Integrated Trade Solution, 2018).
• Considering the issues that were analyzed and studied, international trade, which is the birth of relations between the countries of the world today, or in other words, trade between nations, means through which scientific advances, social and economic developments, and technical advances move from civilized and advanced regions to uncivilized areas. Given and published worldwide.
• In fact, trade means of growth among different nations of the world, but gradually more and more this benefit is received by developed and civilized countries, and as developing countries should be able to take a step towards development through foreign trade and raise the living standards of their people and the benefits of international trade. Together, they should build a barrier to economic progress and development, including the development of their foreign trade at the national and international levels. It makes it stronger and more stable and widens the gap between developed and backward countries day by day. It is still thought in the theory of international trade that trade between countries has some advantages. Used can be recognized as a way out of surplus production. Otherwise, it would not be possible to connect to such adequacy. It comes out. Free trade also prevents
RESULTS
CONCLUSION AND RECOMMENDATIONS
monopolies that are anti-economic adequacy. For one last reason, the continuity of trade between these countries has advanced.
• Because the benefit of trade was not really conceivable, why are these countries still trading? Some may seek to distribute the benefits of trade between developed and developing countries, find the causes of these differences, and take practical steps to eliminate them.
This study sought to examine the Granger Causality among international trade and economic growth in Afghanistan Besides, and the Augmented Dickey-Fuller unit root test was employed to find whether the variables were stationary, and yet the variables were not stationary in level. Therefore, the data became stationary after the first difference. Further, Johansen Cointegration Test was utilized to assess the long-run relationship between variables. Thus, the result of the cointegration test indicated a long-run relationship between international trade and economic growth in Afghanistan. From the tabulated output of the Granger Causality test, it is evident that Export-led to Gross Domestic Product (GDP) but not vice versa. Moreover, Export stimulated Import and vice versa. Finally, Export caused the Balance of Trade at a 10% significant level. In summary, Export is a very important factor influencing the Gross Domestic Product (GDP) and Balance of Trade. Moreover, Import causes Export. Based on analyses and findings, the following recommendations were made:
1. Since there are causality and long-run relationship between international trade and economic growth in Afghanistan, the Afghan government needs to enhance export promotion activities.
2. Afghan authorities should focus on policies of Export promotions and Import substitution. Furthermore, importing goods and materials should be listed and let the domestic infant industries produce it.
3. The Afghan government ought to encourage the import of new technologies and raw materials instead of complete goods to increase productivity and reduce imports.
The above empirical findings indicate that the Government of Afghanistan should try to support the financial development in order to accelerate economic growth, and having a better financial system will be helpful to have stable economic growth. To this aim, a developed infrastructure, good macroeconomic environment, and elimination of all sorts of trade barriers are needed.
For a better financial system, the cooperation of the Government and the Central Bank of Afghanistan is important. In return, a better financial system will promote international trade and economic growth. With the help of this environment, the
production of the country will be increased, which will promote international trade, competition, and efficiency in the economy.
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Websites
https://moci.gov.af/en/adviser-human-resources-management
http://www.xinhuanet.com/english/2021-01/14/c_139667878.htm
https://www.csis.org/chabahar-port-unlocking-afghanistans-potential
