IDEAS home Printed from
   My bibliography  Save this paper

The impact of the trade and financial openness on the economic growth in the countries from the Eastern Europe


  • Macar Stoianov

    (Faculty of Finance and Banking, Bucharest University of Economics)


The impact of trade and financial openness can be measured by the sensitivity of the first moment of the economic growth. Taking into account the domestic conditions, this paper provides an empirical evaluation of the impact of globalization on the economic growth in the Eastern Europe. The data set includes a sample of 9 countries from the Eastern Europe, which are member states of the EU. This paper investigates the possibility of a non-monotonic relationship between the trade/financial openness and the economic growth. The analysis of non-linearity is done by allowing the effects of trade/financial integration to vary with the general level of economic development. The econometric models used in the analysis are the dynamic panel data models: the “Difference” GMM (Arellano-Bond (1991)) and the “System” GMM (Arellano-Bover(1995)/Blundell-Bond(1998)). These models are designed for a dynamic persistent panel data with few time periods and many individuals, with endogenous regressors, with fixed effect, with heteroskedasticity and auto-correlation within cross-sections. The main conclusions of this paper are that trade openness has a significant positive impact on the economic growth while the impact of the financial integration is a negative one. This analysis reveals a strong non-linearity of the impact of trade openness on the economic growth. The non-linearity of the financial openness impact on the economic growth couldn’t be deduced.

Suggested Citation

  • Macar Stoianov, 2008. "The impact of the trade and financial openness on the economic growth in the countries from the Eastern Europe," Advances in Economic and Financial Research - DOFIN Working Paper Series 14, Bucharest University of Economics, Center for Advanced Research in Finance and Banking - CARFIB.
  • Handle: RePEc:cab:wpaefr:14

    Download full text from publisher

    File URL:
    File Function: First version, 2008
    Download Restriction: no

    References listed on IDEAS

    1. Ramey, Garey & Ramey, Valerie A, 1995. "Cross-Country Evidence on the Link between Volatility and Growth," American Economic Review, American Economic Association, vol. 85(5), pages 1138-1151, December.
    2. Salinas, Gonzalo & Aksoy, Ataman, 2006. "Growth before and after trade liberalization," Policy Research Working Paper Series 4062, The World Bank.
    3. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    4. Yanikkaya, Halit, 2003. "Trade openness and economic growth: a cross-country empirical investigation," Journal of Development Economics, Elsevier, vol. 72(1), pages 57-89, October.
    5. M. Ayhan Kose & Eswar Prasad & Kenneth Rogoff & Shang-Jin Wei, 2009. "Financial Globalization: A Reappraisal," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 56(2), pages 143-197, June.
    6. Nickell, Stephen J, 1981. "Biases in Dynamic Models with Fixed Effects," Econometrica, Econometric Society, vol. 49(6), pages 1417-1426, November.
    7. Michael W. Klein, 2003. "Capital Account Openness and the Varieties of Growth Experience," NBER Working Papers 9500, National Bureau of Economic Research, Inc.
    8. David Roodman, 2006. "How to Do xtabond2," North American Stata Users' Group Meetings 2006 8, Stata Users Group.
    Full references (including those not matched with items on IDEAS)

    More about this item


    financial openness; economic growth;


    Access and download statistics


    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:cab:wpaefr:14. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ciprian Necula). General contact details of provider: .

    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.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.