Economic measurement of the impact of a number of macroeconomic variables on Singapore's foreign trade for the period (1980-2023)

Abstract

Foreign trade is one of the most essential elements of international economic relations and represents the oldest and most advanced forms of these interactions. It helps unite nations into a single international financial system by facilitating the transition of many economies from one state to another. Globalization of capital has become one of the most critical factors influencing and transforming the global economy, along with other production-related processes. The study aims to measure and analyze the impact of various macroeconomic variables on Singapore's foreign trade during the period (1980–2023). The empirical analysis using the ARDL model found that Gross Domestic Product has a significant impact on the value of foreign trade. More specifically, a one-unit increase in Gross Domestic Product leads to an increase in the value of foreign trade by (0.95) at a significance level of (1%). In addition, a one-unit increase in government spending per year leads to an increase in the value of foreign trade by about (0.74) at a significance level of (1%). Foreign direct investment is inversely proportional to foreign trade, although this relationship is not significant at the 5% level. The study concludes with several recommendations, including the need to focus on international trade and diversify export and production sources, especially in developing countries. It also suggests adopting measures that support and protect national production, reforming the banking system, allocating public funds to capital expenditure, reducing unnecessary expenditure, limiting current expenditure, and increasing foreign investment in various sectors of the economy, such as industry, agriculture, and services.