Trade Policies and Economic Stability of OPEC Member States
Abstract
As the international business environment becomes more globalized (highly integrated), policymakers globally are clamoring for a more trade-responsive economy. This underscores the rationale behind the establishment of OPEC. Nevertheless, OPEC is beclouded by trade related issues despite its outstanding success recorded over the years. Hence, the paper is targeted at examining the effect of trade openness on economic stability of OPEC member countries. The study decomposed trade policies into three, which are: (i) import ratio (IMR); (ii) export ratio(EXPR): and (iii) trade ratio (TRR) while economic stability was measured by real gross domestic product. The longitudinal (panel) research approach was adopted. The research included a sample of 10 OPEC member countries out of the 13 as of December 31, 2021. The study reported that, import ratio and trade ratio had a positive significant effect on the stability of OPEC member countries. However, both export ratio and exchange rate had negative significant effect on stability of OPEC Member countries. Hence, the paper concludes that, while high import ratio and trade ratio enhance the stability of OPEC member countries, both high export ratio and exchange rate depreciation distorts the stability of OPEC member countries. As such, it is imperative for policy makers to enact measures that effectively foster sustained growth in exports and elevate per capita income. Moreover, it is essential to regularly evaluate trade policies in order to ascertain the adaptability and readiness of local producers in the face of an increasingly competitive global economy, as well as to attain worldwide competitive superiority.
Keywords
Trade PoliciesImport RatioExport RatioTrade RatioEconomic StabilityOPEC
References
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