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Causal Relationship between Trade Openness and Economic Growth: A Panel Data Analysis of Asian Countries

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  • Khandaker Jahangir Alam

    (Department of Economics, Begum Rokeya University, Rangpur 5400, Bangladesh,)

  • Khairul Kabir Sumon

    (Department of Finance and Banking, Begum Rokeya University, Rangpur 5400, Bangladesh)

Abstract

This paper examines the causal relationship between economic growth and trade openness for 15 Asian countries over period 1990 2017. We have applied panel cointegration and causality approaches to examine the long-run and causal relationship between variables. Empirical results confirm the presence of cointegration between variables. The impact of trade openness on economic growth is found to be positive. The panel VECM Granger causality analysis reveals the bidirectional causality between economic growth and trade openness.

Suggested Citation

  • Khandaker Jahangir Alam & Khairul Kabir Sumon, 2020. "Causal Relationship between Trade Openness and Economic Growth: A Panel Data Analysis of Asian Countries," International Journal of Economics and Financial Issues, Econjournals, vol. 10(1), pages 118-126.
    • Handle: RePEc:eco:journ1:2020-01-15
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    Cited by:

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    2. Bannor, Frank & Magambo, Isaiah & Mubenga-Tshitaka, Jean Luc & Mduduzi, Biyase & Osei-Acheampong, Bismark, 2023. "Do effective governance and political stability facilitate the promotion of economic growth through natural resource rents? Evidence from Africa," MPRA Paper 116651, University Library of Munich, Germany.
    3. Philipp Heimberger, 2022. "Does economic globalisation promote economic growth? A meta‐analysis," The World Economy, Wiley Blackwell, vol. 45(6), pages 1690-1712, June.
    4. Ernest Kay Bakpa & Hu Xuhua & Abigail Konadu Aboagye, 2021. "Ghana’s economic growth: Directing our focus on the contributing influences of innovation activities and trade," Growth and Change, Wiley Blackwell, vol. 52(4), pages 2213-2237, December.
    5. Yao Hongxing & Olivier Joseph Abban & Alex Dankyi Boadi, 2021. "Foreign aid and economic growth: Do energy consumption, trade openness and CO2 emissions matter? A DSUR heterogeneous evidence from Africa’s trading blocs," PLOS ONE, Public Library of Science, vol. 16(6), pages 1-25, June.
    6. Tomiwa Sunday Adebayo & Abraham Ayobamiji Awosusi & Jamiu Adetola Odugbesan & Gbenga Daniel Akinsola & Wing-Keung Wong & Husam Rjoub, 2021. "Sustainability of Energy-Induced Growth Nexus in Brazil: Do Carbon Emissions and Urbanization Matter?," Sustainability, MDPI, vol. 13(8), pages 1-21, April.
    7. Rabail Amna Intisar & Muhammad Rizwan Yaseen & Rakhshanda Kousar & Muhammad Usman & Muhammad Sohail Amjad Makhdum, 2020. "Impact of Trade Openness and Human Capital on Economic Growth: A Comparative Investigation of Asian Countries," Sustainability, MDPI, vol. 12(7), pages 1-19, April.
    8. Tomiwa Sunday Adebayo & Festus Victor Bekun & Ilhan Ozturk & Murat Ismet Haseki, 2023. "Another outlook into energy‐growth nexus in Mexico for sustainable development: Accounting for the combined impact of urbanization and trade openness," Natural Resources Forum, Blackwell Publishing, vol. 47(2), pages 334-352, May.
    9. Uktam Umurzakov & Shakhnoza Tosheva & Raufhon Salahodjaev, 2023. "Tourism and Sustainable Economic Development: Evidence from Belt and Road Countries," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(1), pages 503-516, March.
    10. Ashiru Ibrahim & Michael Rabiu Abdulmalik, 2023. "Do trade openness and governance matter for economic growth in Africa? A case of EAC and WAEMU countries," International Economics and Economic Policy, Springer, vol. 20(3), pages 389-412, July.
    11. Abdul Rehman & Hengyun Ma & Sufyan Ullah Khan & Muntasir Murshed & Muhammad Kamran Khan & Fayyaz Ahmad & Muhammad Zubair Chishti, 2023. "Do Exports of Communication Technology, Food, Manufacturing, and Foreign Investments Foster Economic Growth in Pakistan? an Exploration From Asymmetric Technique," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(4), pages 4238-4255, December.
    12. Lethiwe Nzama & Thanda Sithole & Sezer Bozkus Kahyaoglu, 2022. "The Impact of Government Effectiveness on Trade and Financial Openness: The Generalized Quantile Panel Regression Approach," JRFM, MDPI, vol. 16(1), pages 1-20, December.

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    More about this item

    Keywords

    Trade Openness; Economic Growth; Panel Cointegration; Causality.;
    All these keywords.

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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