THE RELATIONSHIP BETWEEN TRADE OPENNESS AND INVESTMENT IN SYRIA

Abstract

This study attempts to investigate the effect of trade openness, GDP and population on the investment in Syria over the period 1980-2010. The cointegration test indicates that investment is positively and significantly related to the trade openness, GDP and population. Population has the biggest effect on the investment. The Granger causality test indicates bidirectional short-run causality relationships between trade openness, GDP, population and investment. There are also unidirectional long-run causality relationship running from trade openness to investment, and bidirectional long-run causality relationships between GDP, population and investment. The study result indicates that it is vital for the Syrian government to still adopt the economic policy in liberalizing foreign trade in order to motivate the investment in the country.