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Openness and Economic Growth in Japan and South Korea: An Empirical Investigation

Author

Listed:
  • Deme, Mamit

    () (Middle Tennessee State University, Department of Economics and Finance)

  • Homaifar , Ghassem A.

    () (Middle Tennessee State University, Department of Economics and Finance)

Abstract

This study investigates the relationship between trade openness and economic growth for Japan and South Korea employing data, estimation technique, model specification, and measures of openness that differ from earlier related works. In contrast to earlier related works this study uses alternative measures of trade openness; particularly, it investigates the impact of imports on growth. The long-run relationship between trade openness and economic growth is investigated applying cointegration techniques, and the short-run causal links are examined by estimating an error-correction vector autoregressive (VAR). Both the long-run and the short-run links are investigated using 1970:1- 1997:1 quarterly data. A majority of the results suggest a link between trade openness and growth. One of the key findings of the study is that for Japan the growth of imports rather than exports have a long-run positive relationship with economic growth. Overall, the results support an outward-oriented policy strategy for both South Korea and Japan.

Suggested Citation

  • Deme, Mamit & Homaifar , Ghassem A., 2001. "Openness and Economic Growth in Japan and South Korea: An Empirical Investigation," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 54(2), pages 163-175.
  • Handle: RePEc:ris:ecoint:0215
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    Cited by:

    1. Hlavac, Marek, 2010. "Freedom as the key to prosperity: Lessons from the world's growth miracles and economic disasters," MPRA Paper 25563, University Library of Munich, Germany.

    More about this item

    Keywords

    Openness; Openness and Economic Growth; Export-Led Growth; Import-Led Growth; International Trade; Cointegration; ErrorCorrection Model; Vector Autoregressive; VAR.;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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