Trade Openness and Growth: Is There Any Link?

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.