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The Impact of Trade Openness on Economic Stability in Asian Countries

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  • Vu Manh Hoai Nguyen

    (Faculty of Finance and Banking, Van Lang University, 69/68 Dang Thuy Tram Street, Ward 13, Binh Thanh District, Ho Chi Minh City 700000, Vietnam)

  • Tin Huu Ho

    (Institute for Development and Research in Banking Technology, University of Economics and Law, Ho Chi Minh City 700000, Vietnam
    Vietnam National University, Ho Chi Minh City 700000, Vietnam)

  • Luan Huynh Nguyen

    (Faculty of Mechanical-Electrical and Computer Engineering, School of Technology, Van Lang University, Ho Chi Minh City 700000, Vietnam)

  • An Thi Ha Pham

    (Faculty of Finance and Banking, Van Lang University, 69/68 Dang Thuy Tram Street, Ward 13, Binh Thanh District, Ho Chi Minh City 700000, Vietnam)

Abstract

The purpose of this study was to investigate the nexus between trade openness and three aspects of macroeconomic stability, including growth stability, inflation stability, and exchange rate stability, in 20 Asian countries from 2011 to 2019. The empirical analysis was carried out with the help of the autoregressive distributed lag (ADRL) model to examine the impact of trade openness on economic stability. Our results revealed that trade openness was negatively associated with the growth stability of the countries located in the Asian region, while the opposite was true for exchange rate stability in the short run. There was, however, no relation between trade openness and inflation stability, which requires further investigation. In addition to contributing new empirical evidence to academic literature, our study expects to have important implications for policymakers. In particular, Asian countries are recommended to speed up the process of trade liberalisation to accelerate long-run economic growth and exchange rate stability.

Suggested Citation

  • Vu Manh Hoai Nguyen & Tin Huu Ho & Luan Huynh Nguyen & An Thi Ha Pham, 2023. "The Impact of Trade Openness on Economic Stability in Asian Countries," Sustainability, MDPI, vol. 15(15), pages 1-20, July.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:15:p:11736-:d:1206373
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