Trade in goods and services and Its effect on economic growth: the case of Jordan

Abstract

International trade is steadily increasing and one of its recent trends is the increase in the volume of trade in services. Nevertheless, the growth effects of trade in services have been insufficiently explored. Therefore, the aim of this study is to investigate empirically the specific growth contribution of the trade in goods and services in Jordan for the period 1980-2014. The model is estimated using the Fully Modified Ordinary Least Squares approach, which corrects for endogeneity of data and serial correlation. The results of the estimated regression are in tune with the economic theory. In particular, it emerges that trade in goods has a negative effect on GDP in Jordan, whereas trade in services positively affects economic performance.