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The Effect of Trade Openness and Economic Freedom on Economic Growth: the Case of Middle East and East Asian Countries

Author

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  • Mohammad Javad Razmi

    (Department of Economics, Ferdowsi University of Mashhad, Iran)

  • Ramiar Refaei

    (Islamic Azad University, Branch of Baneh, Iran)

Abstract

One of the rudiment features of international trade theory is that open economies achieve high economic growth rates than closed economies. The current study aims to investigate how economic freedom impacts economic growth. Therefore, economic growth model is estimated by using 17(Middle East and East Asian) countries' data during 2000-2009.In order to testing the data, panel data analysis is employed. The results show that overall index of economic freedom is positively and robustly correlated with growth, further, the results demonstrate that trade openness is positively associated and statistically significant determinant of growth. We find that economic freedom has significant effect on economic growth. Furthermore, we decompose the economic freedom index into the five categories constructing the index and observed that just index of size of government and index of access to sound money is negatively correlated with growth

Suggested Citation

  • Mohammad Javad Razmi & Ramiar Refaei, 2013. "The Effect of Trade Openness and Economic Freedom on Economic Growth: the Case of Middle East and East Asian Countries," International Journal of Economics and Financial Issues, Econjournals, vol. 3(2), pages 376-385.
    • Handle: RePEc:eco:journ1:2013-02-11
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    References listed on IDEAS

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    1. de Haan, Jakob & Sturm, Jan-Egbert, 2000. "On the relationship between economic freedom and economic growth," European Journal of Political Economy, Elsevier, vol. 16(2), pages 215-241, June.
    2. De Vanssay, Xavier & Spindler, Z A, 1994. "Freedom and Growth: Do Constitutions Matter?," Public Choice, Springer, vol. 78(3-4), pages 359-372, March.
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    4. Erich Weede, 2006. "Economic Freedom and Development: New Calculations and Interpretations," Cato Journal, Cato Journal, Cato Institute, vol. 26(3), pages 511-524, Fall.
    5. de Haan, Jakob & Siermann, Clemens L J, 1998. "Further Evidence on the Relationship between Economic Freedom and Economic Growth," Public Choice, Springer, vol. 95(3-4), pages 363-380, June.
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    Cited by:

    1. Gouider, Abdessalem & Nouira, Ridha & Saafi, Sami, 2022. "Re-Exploring the Nexus Between Economic Freedom and Growth: Is There a Threshold Effect?," Journal of Economic Development, The Economic Research Institute, Chung-Ang University, vol. 47(3), pages 147-167, September.
    2. Nursini Nursini, 2017. "Effect of Fiscal Policy and Trade Openness on Economic Growth in Indonesia: 1990-2015," International Journal of Economics and Financial Issues, Econjournals, vol. 7(1), pages 358-364.
    3. Mohamed Abdouli & Sami Hammami, 2017. "The Impact of FDI Inflows and Environmental Quality on Economic Growth: an Empirical Study for the MENA Countries," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 8(1), pages 254-278, March.
    4. Tolcha, Tassew Dufera & Tchouamou Njoya, Eric & Bråthen, Svein & Holmgren, Johan, 2021. "Effects of African aviation liberalisation on economic freedom, air connectivity and related economic consequences," Transport Policy, Elsevier, vol. 110(C), pages 204-214.
    5. Salamatu Bellah Conteh & Yuan Yijun & Brima Sesay, 2021. "Economic Growth Effects of the Interaction of Trade Openness and Institutions Quality: Empirical Evidence from Sub-Saharan Africa," International Journal of Economics and Financial Issues, Econjournals, vol. 11(1), pages 34-48.
    6. Elham Mohammad Alhaj Yousef, 2022. "The Long-Run Relationship between Disaggregated Government Expenditure and Economic Growth in Jordan," International Journal of Economics and Financial Issues, Econjournals, vol. 12(5), pages 1-9, September.
    7. Yilmaz Bayar, 2016. "Impact of Openness and Economic Freedom on Economic Growth in the Transition Economies of the European Union," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 14(1), pages 7-19.
    8. Leandro do Rosario Viana Duarte & Yin Kedong & Li Xuemei, 2017. "The Relationship between FDI, Economic Growth and Financial Development in Cabo Verde," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 9(5), pages 132-142, May.
    9. Tanin, Tauhidul Islam & Masih, Mansur, 2017. "Does economic freedom lead or lag economic growth? evidence from Bangladesh," MPRA Paper 79446, University Library of Munich, Germany.

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    More about this item

    Keywords

    : Economic Freedom; Openness; Economic Growth; Panel Data;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General

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