The Interactions of Trade Openness and Foreign Reserves in Algeria - An Econometric Study During the Period 1990-2023

Abstract

Reserves over the period 1990–2023. Using both analytical and quantitative approaches, the research analyzes the evolution of key variables and employs the Autoregressive Distributed Lag (ARDL) model to explore the dynamic relationships among them.

The findings reveal a statistically significant positive effect at the 5% level—both in the short and long run—between trade liberalization, oil prices, and foreign exchange reserves. Furthermore, the negative and significant error correction coefficient (–0.19) confirms the presence of a stable adjustment process toward long-term equilibrium.

The study concludes that Algeria’s economy remains highly exposed to external shocks due to its heavy dependence on hydrocarbon exports. These results highlight the urgent need for comprehensive economic policies that promote export diversification and strengthen the contribution of non-oil sectors to foreign trade, thereby ensuring the long-term sustainability of foreign exchange reserves.