Trade liberalization, openness and economic growth: A panel time series analysis for the global economy

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2021-6-31

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Bilgin , Cevat
Şeker, Ayberk

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As countries join international economic system through trade, it is expected to be beneficial to developments of economies all over the world. Accordingly, the conventional opinions assert that the globalization process accelerates the economic development of countries as they liberalize their external trades and integrate their markets to global market. Yet, there have been important objections to this argument coming from theory and empirical analyses. Therefore, it becomes important to evaluate the relation between trade openness and GDP per capita. This paper analyzes the relationship between GDP per capita and trade openness for 83 countries exposed to the globalization process by imposing panel time series methods for the 1960–2018 period. The main conclusion of the paper is that the globalization experience for the developing countries is not as beneficial as for the developed countries. The positive effect of trade openness on economic growth for the developing countries weakens seriously when they aggressively impose trade liberalization policies. Furthermore, this relation disappears for the less developed countries during the liberal times.

Subject Keywords

Globalization, Trade liberalization, Trade openness, Development, Panel cointegration

URI

http://www2.feas.metu.edu.tr/metusd/ojs/index.php/metusd/article/view/1169
https://hdl.handle.net/11511/92099

Journal

ODTÜ Gelişme Dergisi

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Department of Business Administration, Article

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Citation Formats

C. Bilgin and A. Şeker, “Trade liberalization, openness and economic growth: A panel time series analysis for the global economy,” ODTÜ Gelişme Dergisi, vol. 48, no. 1, pp. 31–55, 2021, Accessed: 00, 2021. [Online]. Available: http://www2.feas.metu.edu.tr/metusd/ojs/index.php/metusd/article/view/1169.