Academy of Accounting and Financial Studies Journal (Print ISSN: 1096-3685; Online ISSN: 1528-2635)


Measuring the Effect of Liberating Foreign Trade on Foreign Cash Reserves and Exchange Rate in Iraq for the Period 2004-2019

Author(s): Amera Fadhil Abd Almahdi, Adeeb Qasim Shindi

The economies of developing countries at the beginning of the twenty-first century witnessed fundamental changes. The most important change is adoption of the freedom trade policy and the liberalization of foreign trade. This is one of the most important aspects of liberating economy. This has a clear impact in accelerating the process of economic development for each of these countries. This can be done by reducing the restrictions imposed on the process and providing the necessary support to encourage producers. This can be true by increasing the amount of exports and reducing the amount of imports. Also, this can be true by diversifying exports by adding additional investments. Liberation has a down side also. This is because of the lack of supervision and optimum use of resources. These downsides can lead to a lot of problems such as lowering the value of current currency through increasing the demand on foreign currency leading to inflation. This paper aims know Iraqi economy in general. This is done through numbers and indicators regarding trade balance. This trade balance is not diverse and productivity recorded low. This is because the dependency on oil, which reached 99% of total imports between 2004 and 2019. The paper reached some conclusions, such as there is a positive relationship between imports and cash reserve. In other words, if imports increased by one unit, cash reserve is going to increase by %355.87. Recommendations can contribute in drawing economic policy. This policy should have a clear intellectual approach on one hand and provides a national policy for implementing the programs of this policy on the other.

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