Impacts of Foreign Trade on the Economy of Wood-Based Sectors Generating Different Levels of Value Added in the Slovak and Czech Republics

Abstract

Foreign trade belongs among the main sources of economic growth as classical theories of international trade affirm. The aim of the paper is to evaluate the impact of trade balance flows on sectors generating different value-added in the wood-based industries (WBI) of the Czech and Slovak Republics. The multivariate regression method (MLR) was applied to identify the relationship between foreign trade and economic indicators and also specific indicators assessing impacts of foreign trade on the economy of wood-based industries. The results showed that the performance of high value-added production is only slightly affected by foreign trade. It means that both monitored countries do not utilize raw wood so intensively that the positive effects of foreign trade are manifested. Growth in net exports represents a positive influence on the economy of the sector regardless of the value-added rate only if the increase in imports is smaller than in exports. The contribution of the study to existing knowledge is in using specific indicators evaluating trade impacts on the industry’s economy. The article provides new empirical insights into the influence of foreign trade balance flows on the economy of wood-based sectors with a different value-added rate.