Does openness affect economic growth? : A panel data on developing and developed countries

University essay from Södertörns högskola/Nationalekonomi; Södertörns högskola/Nationalekonomi

Abstract: This paper investigates the impact of trade openness on economic growth through a panel analysis containing a set of 61 countries over 15 years. The method we use is the fixed effect regression model in Stata, to see whether openness to trade has explanatory power over GDP per capita growth. We use secondary data taken from World bank and Worldwide Governance Indicators. The data used is a panel data containing 61 countries and the period we are studying starts at 2002 and ends in 2016, a 15 years' time interval. Our empirical results suggest that openness during these years have had a small negative impact on growth, but although this, the variable does not seem to have a statistical significance upon per capita growth within this period of time. Therefore, with reference to this study we cannot see any significance of openness upon growth.

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