The Impact of Shanghai Cooperation Organization Membership on the Balance of Payments: A Case Study of Selected Countries

Document Type : Research Paper

Authors

1 Associate Professor and Faculty Member, Faculty of Economics, Management and Administrative Sciences, Department of Economics, Semnan University, Semnan, Iran

2 Department of Economics, Faculty of Economics, Management and Administrative Sciences, Semnan University, Semnan, Iran

3 semnan university

10.30465/jnet.2025.52309.2221

Abstract

This study investigates the impact of Shanghai Cooperation Organization (SCO) membership on the balance of payments in selected member countries, focusing on the organization’s potential to enhance trade and regional economic cooperation. Using a quantitative approach, we employ panel data from 2003 to 2020, develop an econometric model, and estimate it using the Panel-Corrected Standard Errors (PCSE) method. The findings reveal a positive and statistically significant effect of SCO membership on the balance of payments, underscoring the trade-enhancing role of economic liberalization associated with regional integration. Moreover, adjusted net national income and real exchange rates exert a negative and significant impact on the balance of payments, highlighting the need for stronger domestic production and prudent exchange rate policies. Interestingly, SCO membership appears to mitigate the adverse effects of national income growth on the balance of payments, suggesting that integration into the SCO framework may help member countries better manage external accounts amid rising income and domestic demand. Although the government expenditure-to-GDP ratio does not exhibit a statistically significant effect, improved monitoring and strategic allocation of public spending—particularly toward infrastructure and productive sectors—could yield indirect benefits for the external balance.

Keywords

Files

History

  • Receive Date: 25 June 2025
  • Revise Date: 09 August 2025
  • Accept Date: 17 September 2025

Share

How to cite

Statistics