The effect of foreign trade on growth, employment and real wages

Foreign trade has the effects that raising growth, decrease unemployment and improving real wages for the group of many countries. Foreign trade is becoming one of the most important means of development as the way of gradually increasing for the developed and developing countries.The research question of this study is to determine the effects on growth export, import, employment and real wages in developed, developing and little developed countries. The ultimate purpose concerned this research question is to investigate the effects and to exploit the results for the rate of growth, employment and real wages as theoretically.The study began with large theoretical basic facilities. In the empirical part, in 12 developed countries 1980-2010, in 7 developing countries 1993-2010 and less developed countries 1993-2003, in these periods the effect of foreign trade on growth, employment and real wages were analysed by the method of panel data. The reason behind the utilization of panel data is this study is that; it allows us to work on a data set that has time and cross-section dimensions and therefore it provides some advantages compared to time series only or cross-section only data analysis. The first, its widely common among social scientist recently as it enables to gain a data set with both time and cross-section dimensions. The second, panel data analysis has a number of advantages rather than the analysis method including only time series or cross-section data.As a result of this study, in developed and developing countries, a relation of causation was confirmed in import and export in growth, unemployment and real wages. In less developed countries, although there is causality in export and import and real wages, growth in import and in employment a causality couldn?t be confirmed.