The impact of terms of trade on the economic growth: Case study Iraq from 1990-2019

The purpose of this thesis is to investigate the effects of terms of trade (TOT) on Iraqi economic growth (GDP) considering capital stock and labor force. Data from the World Bank and Iraqi government statistics were used to create a time series from 1990 to 2019. To investigate the interrelationship among the variables, the ARDL model has been chosen in this study because it can be applied on models where variables included in the equations are stationary at different levels. The empirical findings of the study demonstrate that labor and capital have a beneficial impact on economic growth both in the short and long run. The findings also reveal that TOT has statistically significant, negative long- and short-terms effects on Iraqi economic growth. The negative effect of TOT can be explained by the fact that the import price of products is generally greater than the export price, or that the rate of increase in the import price is generally higher than the rate of growth in the export price.