Analysis and measurement of the impact of foreign trade on foreign reserves in Iraq for the period 2004-2021

Abstract

This research aims to show the impact of foreign trade on foreign reserves in Iraq for the period (2004-2021). As a result of the increasing interest in recent decades in the issue of foreign reserves and their management, which accompanied the increase in economic crises, so that keeping an appropriate percentage of these reserves becomes a safety factor against economic crises at home and abroad and an important investment tool. With regard to the Iraqi economy, the lifting of the economic embargo after 2003 and the increasing values of oil exports with the rise in oil prices led to large financial revenues from foreign exchange, which led to a significant increase in the volume of foreign reserves in the budget of the Central Bank. Oil is considered one of the most influential variables on foreign reserves in Iraq, because Iraq relies almost entirely on financing its expenditures and imports through the production and export of oil only. This research used the descriptive method and the standard method using time series, the cointegration model, the test of instability of variance, and the autocorrelation test (LM). The research reached a number of conclusions, the most important of which are: (69%) of the changes in the dependent variable are due to the independent variables. There is also a positive relationship between foreign reserves and exports. There is a long-term equilibrium relationship between the research variables.