Trade Openness and Economic Growth: Evidence from Countries in Asia and the South Pacific

Abstract

This study examines the relationship between trade openness and economic growth across selected Asian and South Pacific countries from 2000 to 2021. Key indicators on Gross Domestic Product (GDP) growth rate, foreign debt, export values, and inflation are analyzed for insights into economic dynamics. Positive correlations between foreign debt and export values suggest export utilization to alleviate debt. Conversely, negative correlations between inflation and export values underscore challenges during inflationary periods, emphasizing need for effective inflation management. Fixed Effects Model analysis unveils coefficients for independent variables, highlighting their impact on GDP. The study's explanatory power, measured by the R-squared value, underscores the collective influence of these variables on GDP variation. Policy implications stress the importance of export promotion strategies to bolster revenue amidst high foreign debt levels. Effective inflation management is vital to maintain export competitiveness. Prudent debt management emerges as crucial for economic stability. Future research should explore nuanced mechanisms linking trade openness and economic growth, tailored to each country's economic context. This approach can inform targeted policy recommendations, acknowledging diversity among nations. Globally, the study emphasizes interconnectedness among countries and the significance of collaborative efforts to navigate shared challenges and capitalize on mutual opportunities in the global economy. Keywords: Trade openness, Economic growth, Gross domestic product, Foreign debt, Fixed effects model.