Abstract:

The relationship between foreign trade and economic growth is one of the oldest topics in the economic literature and is still being analyzed today. There are two different views on how foreign trade affects economic growth. These views are respectively, Imports-based growth hypothesis where imports indirectly effect economic growth positively and export-based hypothesis where country's production capacity grows parallel with economic growth. Due to the increasing need for input, more capital, and intermediate goods are exported, thereby increasing exports. In 1991, with the dissolution of the Soviet Union, the countries that gained independence had to adapt quickly to the liberal economy. These countries, whose economic structures are different, have tried to accelerate their economic growth by attracting foreign direct investment and increasing their exports. The foreign direct investment, export, and import variables were statistically significant on the gross domestic product in the model, which was established by the panel data analysis method of Belarus, Kazakhstan, Kyrgyzstan, Armenia, and Russia, which are members of the Eurasian Economic Union, between the years 1995-2018. Among these, the affects of import and export variables were estimated as positive, while foreign direct investment was estimated as negative. GDP leads to a change of 2.3810, 0.1114, and -1.3789 units in the face of an increase in exports, imports, and foreign direct investments, respectively.

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