The Impact of Trade Policies on Promoting Growth in Developing Countries

Abstract

This study analyzes the successfulness of four categories of policies, which are tariff reduction, infrastructure development, business investment, and educational advancement in the growth of developing countries, shown by GDP and employment as the indicators. By predicting the impact of the tariff reduction model on trade and analyzing the theory of the implication of import and export volumes on economic growth, it is concluded that there is no direct correlation between tariff reductions and GDP growth. Data suggest that the present relationship between educational development and economic growth is negative, but the literature also studies that the results of GDP growth need to be shown in the long term, and it is difficult to derive long-term effects from the example chosen in the study. As for the second indicator of growth, which is employment, the overall impact of tariff reduction and education enhancement policies tend to be positive, even though the literature suggests conflicting views on the causal relationship between all four policies and employment. While empirical results show that the stimulation of infrastructure investment and business investment shows a significant positive correlation with GDP growth in each country.