International Trade, Foreign Direct Investment, and Economic Growth in Togo’s Economic Perspective

Abstract

In contemporary times, economic globalization and liberalization is as a result of international trade and the significant role of foreign direct investment. Due to absolute and comparative advantage, and product differentiating, its quintessential and imperative for countries to engage in international trade, not only to increase their consumption basket, but also to expand and strengthen their economic growth through international capital inflows, transfer of technology, skilled labour and competitive domestic markets. This study investigates the relationship between international trade, foreign direct investment, and economic growth in Togo’s economic perspective. The study employed the Autoregressive distributed lag and Error correction models for the econometric and empirical analysis. The empirical results reveal that in the short run Togo’s economic growth can be boosted and revitalized through foreign direct investment, trade freedom, trade openness, and exchange rate appreciation, however, in the long run only trade openness promote economic growth. Foreign direct investment and trade can be seen as a vehicle for Togo’s economic growth and development.

Keywords: Autoregressive distributed lag, foreign direct investment, trade openness, international trade, Togo.