The Nexus Between Economic Growth and Fiscal Revenues: Empirical Evidence from Central Asia in the Context of Free Trade Agreement Integration

This study empirically investigates the nexus between economic growth and fiscal revenues in Central Asian economies within the context of Free Trade Agreement (FTA) integration. Employing Vector Autoregression (VAR), Granger causality tests, and Autoregressive Distributed Lag (ARDL) bounds testing over annual panel data spanning 1995 to 2023, the study identifies a unidirectional positive causality running from economic growth to fiscal revenues. When FTA integration is incorporated as a moderating variable, the findings reveal that trade liberalisation amplifies fiscal transmission mechanisms and plays a significant role in achieving fiscal sustainability. The interaction term between economic growth and FTA integration is statistically significant, confirming that deeper trade integration enhances the efficiency with which growth translates into government revenue. The results underscore the necessity for policymakers to coordinate trade and fiscal policies in a coherent strategic framework.