Empirical Analysis of the Effects of Trade Openness on Economic Growth: An Evidence for South East European Countries

Fetahi-Vehapi, Merale; Sadiku, Luljeta; Petkovski, Mihail

doi:10.1016/s2212-5671(15)00004-0

Cited by 120 publications

(77 citation statements)

References 18 publications

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“…Results of FMOLS and DOLS show that a 1% increase in LLFP decreases LGDPPC by 1.69% and 1.49% in Southern Asia. Results indicate that LLFP has a negative and significant impact on LGDPPC according to FMOLS and an insignificant impact according to DOLS, which is supported by [39,65]. When the ratio of labor force participation exceeds labor demand, it causes disequilibrium in the labor market.…”

Section: Resultsmentioning

confidence: 81%

“…Kong et al [38] revealed that trade openness has a positive relationship with, and significantly improves the quality of, economic growth in china. In Southeast Europe, Fetahi [39] showed the impact of trade openness and economic growth. The results indicated a positive influence of FDI on economic growth as well as trade openness and GDP by using pooled ordinary least square (POLS) regression.…”

Section: Introductionmentioning

confidence: 99%

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Impact of Trade Openness and Human Capital on Economic Growth: A Comparative Investigation of Asian Countries

et al. 2020

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The aim of this study is to analyze the impact of trade openness and human capital on economic growth in 19 Asian countries from 1985 to 2017. We selected two geographically distributed regions (Western and Southern Asia) based on difference in their GDP per capita. We applied the unit root tests to examine the level of stationarity and found that all variables were integrated at first difference. Kao and Fisher cointegration tests were employed and the results revealed the presence of a long-run relationship. We applied fully modified ordinary least square (FMOLS) and dynamic ordinary least square (DOLS) models to check the magnitude of the long-run coefficients among trade openness, human capital and economic growth. To investigate the direction of causality, we used a Dumitrescu and Hurlin (DH) causality test. The results indicated that trade openness and human capital have a significant and positive relationship while labor force participation has a negative effect on economic growth in Southern Asia, and in the case of Western Asia, the impact is positive. Foreign direct investment (FDI) has a negative and significant impact on GDP per capita (GDPPC) in Western Asia while it is positive and significant in Southern Asia; Total population (TPOP) has a negative impact on GDPPC in both regions. Furthermore, human capital has a positive and significant impact on trade openness in both panels. Meanwhile, labor force participation (LFP) has a positive and significant impact on trade openness in Southern Asia and a negative impact in the case of Western Asia. Trade openness and economic growth have bidirectional causality in Western Asia and unidirectional causality in Southern Asia. It also shows that human capital and economic growth have unidirectional causality in both regions. promotes growth in several ways. It increases capital formulation and expands markets through an increase in investment [4,5]. It creates enormous benefits to the country's industrial sectors through developing new methods of production and increases the level of employment by creating more job opportunities, and may lead to poverty reduction [6]. There are three tools to measure the ratio of trade openness: one of them is the ratio of total trade volume (import and export) to GDP [7]; the second is the ratio of import and export to total population [8], and finally it can be calculated on the basis of tariff rates. In the current economic scenario, no country can develop successfully without trade openness, investment, and the migration of people. Published literature explored the positive impact of labor productivity on trade openness [9,10]. Trade openness and FDI bring technological transformation in an economy and also help to enhance the human capital of that particular economy [11].Human capital is also observed as a fundamental source of economic growth [12]. It enhances the total productivity level and potential earnings of the labor force [13]. Human capital is also estimated by skills, qualification, ability to create new produ...

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Section: Resultsmentioning

confidence: 81%

Section: Introductionmentioning

confidence: 99%

Impact of Trade Openness and Human Capital on Economic Growth: A Comparative Investigation of Asian Countries

et al. 2020

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“…Table 1 summarises the findings of the study. The overall study results show that physical capital is largely positive and significantly associated with economic growth (Dollar 1992;Fischer 1992;Knight, Loayza, and Villanueva 1993;Hamilton and Monteagudo 1998;Barro 1999Barro , 2003Bleaney, Gemmell, and Kneller 2001;Anaman 2004;Acikgoz and Mert 2014;Bayraktar 2006;Prochniak 2011;Checherita-Westphal and Rother 2012;Anyanwu 2014;Fetahi-Vehapi, Sadiku, and Petkovski 2015). In some cases, the results also show that in developing countries investment can be negatively and significantly associated with growth (Most and Vann de Berg 1996;Chang and Mendy 2012).…”

Section: Determinants Of Economic Growth In South-eastern and Centralmentioning

confidence: 72%

“…The four empirical studies that are examined include: Botric and Slijepcevic (2008), De Grauwe and Schnabl (2008), Prochniak (2011) and Fetahi-Vehapi, Sadiku, and Petkovski (2015). Botric and Slijepcevic (2008) investigated the association between banking sector efficiency and economic growth in six South-Eastern European countries, namely: Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Macedonia and Romania during the period 1995-2005.…”

Section: Determinants Of Economic Growth In South-eastern and Centralmentioning

confidence: 99%

Macroeconomic Determinants of Economic Growth: A Review of International Literature

Chirwa

Odhiambo

2016

South East European Journal of Economics and Business

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The paper conducts a qualitative narrative appraisal of the existing empirical literature on the key macroeconomic determinants of economic growth in developing and developed countries. Much as other empirical studies have investigated the determinants of economic growth using various econometric methods, the majority of these studies have not distinguished what drives or hinders economic growth in developing or developed countries. The study finds that the determinants of economic growth are different when this distinction is used. It reveals that in developing countries the key macroeconomic determinants of economic growth include foreign aid, foreign direct investment, fiscal policy, investment, trade, human capital development, demographics, monetary policy, natural resources, reforms and geographic, regional, political and financial factors. In developed countries, the study reveals that the key macroeconomic determinants that are associated with economic growth include physical capital, fiscal policy, human capital, trade, demographics, monetary policy and financial and technological factors.

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“…In the first direction, authors have enriched the endogenous growth model by introducing in addition to the basic model variables other variables related to health conditions, institutions and free trade policy ( (Berthé lemy et al, 1997), (Abdouni & Hanchane, 2008), (Mansouri, 2009) and (Bouoiyour et al, 2009)). On the second research direction, some authors have used more sophisticated econometric methods because studies that rely on cross section data has been criticized (GMM panel data, Bayesian approach ...) ( (Fall & Thiaw, 2012), (Leon-Gonzalez & Vinayagathasan, 2015), (Fetahi-Vehapi et al, 2015) and (Mbulawa, 2015)). The authors of the third research direction have introduced the role of quality education in explaining growth ( (Hanushek & Kimko, 2000), (Barro & Lee, 2001), (Altinok & Murseli, 2007), (Hanushek & Woessmann, 2012), (Altinok et al, 2014)).…”

Section: Review Of the Empirical Studiesmentioning

confidence: 99%

Human Capital and Economic Growth in Morocco: Evidence from Bayesian Model Averaging

Essardi¹,

Razzouk²

2017

IBR

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The paper investigates the relationship between human capital and economic growth in Morocco during the period from 1965 to 2015. In order to test this relationship we estimated a growth function using firstly the Johansen multivariate cointegration test and the Granger causality test. Secondly, we used the method of the Bayesian Model Averaging (BMA) that takes into consideration the uncertainty related to the specification of the model studied. In the theoretical literature, the difficulty of measuring human capital is often stressed. In order to overcome this problem, we use four proxies of human capital: first, we employ the average years of schooling. Second, we use the index of the gap in life expectancy between Morocco and developed countries. Third, we integrate the qualitative aspects of education and health by constructing two composite indicators of human capital using Principal Component Analysis (PCA) method.The main results of regression analysis confirm that in the specification of determinants of GDP per worker the average years of total schooling, the life expectancy index and the indicator of quality of health affect positively and significantly level of GDP per worker. However, in the specification of determinants of the growth of the GDP per worker, we found there is no proxy of human capital that affects significantly the growth of the GDP per worker.In addition, the results of Granger causality test show that only the indicator of quality of health that cause the GDP per worker. As well, these results show that the average years of total schooling and the indicator of quality of education cause the growth of GDP per worker. We suggest that the Moroccan authorities should make additional efforts to raise the level of quality of human capital especially in the health sector and increase the productivity of both public and private investment.

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Empirical Analysis of the Effects of Trade Openness on Economic Growth: An Evidence for South East European Countries

Cited by 120 publications

References 18 publications

Impact of Trade Openness and Human Capital on Economic Growth: A Comparative Investigation of Asian Countries

Impact of Trade Openness and Human Capital on Economic Growth: A Comparative Investigation of Asian Countries

Macroeconomic Determinants of Economic Growth: A Review of International Literature

Human Capital and Economic Growth in Morocco: Evidence from Bayesian Model Averaging

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