Acta Univ. Agric. Silvic. Mendelianae Brun. 2011, 59(2), 333-338 | DOI: 10.11118/actaun201159020333

International trade and endogenous growth: the case of Czech economy

Marcel Ševela

Ústav ekonomie, Mendelova univerzita v Brně, Zemědělská 1, 613 00 Brno, Česká republika

The paper is focuses on testing of the presence of increasing returns to scale in the Czech economy production function that is constructed upon Solow growth accounting formula. The growth relation is adapted for imperfect competition in the goods market. In the second step the spillover effect to total factor productivity is tested based on import openness of the economy and share of productive equipment imports to gross domestic product. Using data on Czech economy in years 1993-2009 for OLS estimates, the presence of increasing returns to scale was proved in all tested models, the obtained returns to scale parameter is about 2. Explained variability is relatively poor for the full data sample, limiting the data range to 1999-2009 the model is able explain almost 57 %. Tests for spillover effect modeled through import shares do not bring evidence about appropriate significance, the common test of OLS approach indicated very low contribution for import variables in both versions.

Keywords: endogenous growth, economic growth, returns to scale, international trade, imperfect competition

Received: December 17, 2010; Published: July 7, 2014  Show citation