Econometric modeling of relationship between trade openness and economic development in Democratic Republic of Congo

Abstract

The International Monetary Founds (IMF) observed that the degree of trade openness of Congolese economy is not sufficiently high. It recommended to authorities to increase it following economic agreement negotiated with European Union (EU) and the agreements negotiated with United States of America (USA). However, economic regression does not stop to worsen in Democratic Republic of Congo (DRC). That is why; this study aims to assess the long run relationship between trade openness and economic development in DRC. The data pooled from World Bank, covering the period from 1983 to 2017. The Augmented Dickey-Fuller test showed that variables are stationary in second difference. The Johansen test showed that one relation exists between variables. The assessment this nexus by cointegrating vector autoregressive (VAR) model, showed that economic development declines when trade openness increases. Moreover, improvement of terms of exchange favors the economic development. Where, the economic reforms must purpose the competitiveness of economic system of production.