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Trade Openness and Growth: Is There Any Link?

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  • Prabirjit Sarkar

Abstract

The present study examines the relationship between openness (tradeGDP ratio) and growth. Our cross-country panel data analysis of a sample 51 less developed countries shows that for only 11 rich and highly trade-dependent countries a higher real growth is associated with a higher trade share. Time series study of individual country experiences shows that the majority of the countries covered in the sample including the East Asian countries experienced no positive long-term relationship between openness and growth during the 1961-2002 time period. Our study of the experience of various regions and groups shows that only the Middle Income group exhibited a positive long-term relationship.

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  • Prabirjit Sarkar, 2008. "Trade Openness and Growth: Is There Any Link?," Journal of Economic Issues, Taylor & Francis Journals, vol. 42(3), pages 763-785, September.
  • Handle: RePEc:mes:jeciss:v:42:y:2008:i:3:p:763-785
    DOI: 10.1080/00213624.2008.11507178
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    3. Shih-Chih Chen & Jianing Hou & De Xiao, 2018. "“One Belt, One Road” Initiative to Stimulate Trade in China: A Counter-Factual Analysis," Sustainability, MDPI, vol. 10(9), pages 1-13, September.
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    5. Serdar Birinci, 2013. "Trade openness, growth, and informality: Panel VAR evidence from OECD economies," Economics Bulletin, AccessEcon, vol. 33(1), pages 694-705.
    6. Olabisi Olabode Eric, 2015. "Trade Liberalization and Economic Growth in Nigeria: Do Concern Matters?," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 3(6), pages 306-311, June.
    7. Yilmaz Bayar & Marius Dan Gavriletea & Zeki Ucar, 2018. "Financial Sector Development, Openness, and Entrepreneurship: Panel Regression Analysis," Sustainability, MDPI, vol. 10(10), pages 1-11, September.
    8. Navaratnam Ravinthirakumaran, 2014. "Applicability of Openness-led Growth Hypothesis in Sri Lanka," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 15(2), pages 241-263, September.
    9. Awad. T., 2012. "Trade Liberalization Policy And Growth By Sector: Is It Working For Jordan?," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 12(2).
    10. Bakari, Sayef, 2016. "Impact of Exports and Imports on Economic Growth in Canada: Empirical Analysis Based on Causality," MPRA Paper 75910, University Library of Munich, Germany.
    11. Enrico Marelli & Marcello Signorelli, 2011. "China and India: Openness, Trade and Effects on Economic Growth," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 8(1), pages 129-154, June.
    12. Yanqing Jiang, 2016. "Trade integration and regional inequality: a theoretical framework with empirical implications for China," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 14(4), pages 365-384, October.
    13. Orhan Cengiz, 2021. "The Political Economics of Trade Openness and Its Impacts on Corruption," Istanbul Journal of Economics-Istanbul Iktisat Dergisi, Istanbul University, Faculty of Economics, vol. 71(71-2), pages 499-525, December.
    14. Jianing Hou & Shih-Chih Chen & De Xiao, 2018. "Measuring the Benefits of the “One Belt, One Road” Initiative for Manufacturing Industries in China," Sustainability, MDPI, vol. 10(12), pages 1-16, December.
    15. Monojit Chatterji & Sushil Mohan & Sayantan Ghosh Dastidar, 2014. "Relationship Between Trade Openness And Economic Growth Of India: A Time Series Analysis," Journal of Academic Research in Economics, Spiru Haret University, Faculty of Accounting and Financial Management Constanta, vol. 6(1 (March)), pages 45-69.
    16. Shaukat, Badiea & Zhu, Qigui & Khan, M. Ijaz, 2019. "Real interest rate and economic growth: A statistical exploration for transitory economies," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 534(C).
    17. Jiranyakul, Komain, 2014. "Temporal causal relationship between stock market capitalization, trade openness and real GDP: evidence from Thailand," MPRA Paper 60623, University Library of Munich, Germany.
    18. Chandran, V.G.R. & Munusamy, 2009. "Trade openness and manufacturing growth in Malaysia," Journal of Policy Modeling, Elsevier, vol. 31(5), pages 637-647, September.
    19. Jiang, Yanqing, 2011. "Understanding openness and productivity growth in China: An empirical study of the Chinese provinces," China Economic Review, Elsevier, vol. 22(3), pages 290-298, September.
    20. İsmail Durak Author-Name:Ergün Eroğlu, 2019. "The Nexus of Economic Growth, Trade Openness and Banking Sector Depth In OIC: An Application of Panel Data Analysis," Alphanumeric Journal, Bahadir Fatih Yildirim, vol. 7(2), pages 205-238, December.
    21. Jiranyakul, Komain, 2014. "Temporal causal relationship between stock market capitalization, trade openness and real GDP: evidence from Thailand," MPRA Paper 59652, University Library of Munich, Germany.
    22. Li, Guangchen & Wei, Weixian, 2021. "Financial development, openness, innovation, carbon emissions, and economic growth in China," Energy Economics, Elsevier, vol. 97(C).
    23. CHIKHURi, Krishna, 2014. "Agricultural Trade Liberalization and Economic Growth: Is there a connection in Sub-Saharan Africa?," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 14(1), pages 161-174.

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    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • 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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