IDEAS home Printed from https://ideas.repec.org/a/taf/jitecd/v28y2019i8p960-995.html
   My bibliography  Save this article

Impact of trade openness on GDP growth: Does TFP matter?

Author

Listed:
  • Muhammad Ramzan
  • Bin Sheng
  • Muhammad Shahbaz
  • Jian Song
  • Zhilun Jiao

Abstract

The objective of this study is to empirically explore the impact of trade openness on GDP growth initiating with the idea that trade openness cannot be fully characterized through the different openness measures only, we propose to account for total factor productivity (TFP) development level as an additional dimension of countries’ trade integration. Our empirical application is based on 35 years’ balanced panel of 82 countries spanning 1980–2014. To address the potential endogeneity issue, we use the system GMM estimator developed for dynamic panel data models. The results outline that there exists an interesting non-linear pattern between trade openness and GDP growth when TFP development level is taken as an intervening variable into account: trade may have a negative impact on GDP growth when countries have specialized in low-TFP development level; trade openness clearly boosts GDP growth once countries exhibit a minimum threshold of TFP development level. Therefore, there is some pattern of complementarity between trade openness and TFP development level so that the higher the TFP development level, the higher the impact of the trade openness on GDP growth.

Suggested Citation

  • Muhammad Ramzan & Bin Sheng & Muhammad Shahbaz & Jian Song & Zhilun Jiao, 2019. "Impact of trade openness on GDP growth: Does TFP matter?," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 28(8), pages 960-995, November.
    • Handle: RePEc:taf:jitecd:v:28:y:2019:i:8:p:960-995
    DOI: 10.1080/09638199.2019.1616805
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/09638199.2019.1616805
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/09638199.2019.1616805?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ulucak, Recep & Koçak, Emrah & Erdoğan, Seyfettin & Kassouri, Yacouba, 2020. "Investigating the non-linear effects of globalization on material consumption in the EU countries: Evidence from PSTR estimation," Resources Policy, Elsevier, vol. 67(C).
    2. Hunjra, Ahmed Imran & Azam, Muhammad & Bruna, Maria Giuseppina & Taskin, Dilvin, 2022. "Role of financial development for sustainable economic development in low middle income countries," Finance Research Letters, Elsevier, vol. 47(PB).
    3. Biswajit Maitra & Moutushi Chakraborty, 2021. "International trade, human capital and economic growth in Sri Lanka," International Journal of Economic Policy Studies, Springer, vol. 15(2), pages 405-426, September.
    4. Hafiz Wasim Akram & Alam Ahmad & Leo-Paul Dana & Asif Khan & Samreen Akhtar, 2024. "Do Trade Agreements Enhance Bilateral Trade? Focus on India and Sri Lanka," Sustainability, MDPI, vol. 16(2), pages 1-30, January.
    5. Abhijit Chakraborty & Tobias Reisch & Christian Diem & Pablo Astudillo-Estévez & Stefan Thurner, 2024. "Inequality in economic shock exposures across the global firm-level supply network," Nature Communications, Nature, vol. 15(1), pages 1-8, December.
    6. Bin Amin, Sakib & Taghizadeh-Hesary, Farhad & Khan, Farhan & Manal Rahman, Faria, 2024. "Does technology have a lead or lag role in economic growth? The case of selected resource-rich and resource-scarce countries," Resources Policy, Elsevier, vol. 89(C).
    7. Qianxiao Zhang & Syed Asif Ali Naqvi & Syed Ale Raza Shah, 2021. "The Contribution of Outward Foreign Direct Investment, Human Well-Being, and Technology toward a Sustainable Environment," Sustainability, MDPI, vol. 13(20), pages 1-29, October.
    8. Shaobin, Guo & Ahmad, Khalil & Khan, Naqib Ullah, 2024. "Natural resources, geopolitical conflicts, and digital trade: Evidence from China," Resources Policy, Elsevier, vol. 90(C).
    9. Tahir, Muhammad & Hayat, Arshad, 2020. "Does International Trade Promote Economic Growth? An Evidence from Brunei Darussalam," MPRA Paper 102504, University Library of Munich, Germany.
    10. Emmanuel Olajide Adebayo, 2019. "Trade Trend and Sustainable Development in Nigeria," Business & Management Compass, University of Economics Varna, issue 4, pages 294-308.
    11. Emma Serwaa Obobisa & Haibo Chen & Emmanuel Caesar Ayamba & Claudia Nyarko Mensah, 2021. "The Causal Relationship Between China-Africa Trade, China OFDI, and Economic Growth of African Countries," SAGE Open, , vol. 11(4), pages 21582440211, December.
    12. Hunjra, Ahmed Imran & Hassan, M. Kabir & Zaied, Younes Ben & Managi, Shunsuke, 2023. "Nexus between green finance, environmental degradation, and sustainable development: Evidence from developing countries," Resources Policy, Elsevier, vol. 81(C).
    13. Gislain Stéphane Gandjon Fankem & Mohamadou Oumarou, 2020. "Trade Openness and Economic Growth in Sub-Saharan Africa : Evidence from New Trade Openness Indicator," Economics Bulletin, AccessEcon, vol. 40(4), pages 2920-2931.
    14. Redmond, Trumel & Nasir, Muhammad Ali, 2020. "Role of natural resource abundance, international trade and financial development in the economic development of selected countries," Resources Policy, Elsevier, vol. 66(C).
    15. William Geslin ONDAYE, 2023. "Non-linear Effects of Trade Openness on Economic Growth," Applied Economics and Finance, Redfame publishing, vol. 10(2), pages 37-45, May.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:jitecd:v:28:y:2019:i:8:p:960-995. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RJTE20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.