Investigating the Nexus Between Forest Product Trade and Economic Growth: Evidence From the Autoregressive Distributed Lag Approach

ABSTRACT The study aims to scrutinise the nexus amongst the exports of forest products, gross capital formation, exchange rates, population, and economic growth of BRICS (Brazil, Russia, India, China, and South Africa) and USMCA (United States–Mexico–Canada Agreement) countries. This study employs an autoregressive distributed lag (ARDL) model using annual time‐series data from 1970 to 2023. The estimated elasticities of the net exports of forest products obtained from ARDL confirm their significant role in the economic growth of BRICS and USMCA countries in both the short and long run. The estimated results also highlight that the International Tropical Timber Agreement (ITTA, 1983 and 1994), trade barriers (anti‐dumping and countervailing duties) imposed on forest products, and trade blocs (BRICS and USMCA) significantly affect economic growth. This study provides new evidence for policymakers to formulate precise policies to diversify and expand the forest product market by exploring new trade partners, changing market conditions and free and fair trade. The study suggests introducing new policies and agreements for forest trade more effectively, thereby enhancing a country's economic growth whilst maintaining a sustainable environment and forest diversity. Additionally, the study recommends that an effective policy is needed to resolve trade disputes and create a conducive environment for the forest product trade.