Assessing the link between trade openness and output growth in Malaysia: An econometric assessment

Zakariah, Sahidah; Pyeman, Jaafar

doi:10.1109/beiac.2012.6226070

Cited by 1 publication

(2 citation statements)

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“…According to Ricardo's theory of competitive advantage, trade openness has a favorable effect on economic growth because it increases competitiveness and specialisation as a result of liberalisation policy. However, this theory seems to be vulnerable and inconclusive since the relationship between openness and growth in different countries will vary due to a variety of factors such as country development levels or economic reforms (Zakariah & Pyeman, 2012).…”

Section: Theoretical Literature Reviewmentioning

confidence: 99%

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The Impact of Trade Openness and FDI on Nigeria’s Economic Growth: Revisiting the Unsettled Debate

Ari

Jibir

Hassan

2022

Review of Market Integration

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The association between trade openness, foreign direct investment (FDI) and economic growth has been thoroughly researched, producing contradictory and unsettled findings. The main reason behind such mixed results may be the lack of capital stock and labour force in the growth–trade relationship. In this study, we re-examine the impact of trade openness and FDI on economic growth. Hence, we used annual time series data for the period of 1996–2019. We evaluate the robustness of our findings by using more than one index of trade openness and by controlling relevant variables that are found significant in growth literature. The Autoregressive Distributed Lag (ARDL) model is used in this article. The results indicate that FDI and capital stock are linked to economic growth in the short and long term. Trade openness, on the other hand, has a negative impact not only on short-term but also on long-term growth. Furthermore, we discovered corruption, inflation and labour force to have significant negative association with economic growth. This connotes that openness to capital flows is more important to the Nigerian economy than trade openness. Thus, if complementary strategies are implemented, the negative association between economic growth and trade openness may be significantly reversed. These results, therefore, suggest the promotion of policies that support improvement in capital formation by private, public and foreign investors. JEL Classification C13, F10, F43, N17, O40

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Section: Theoretical Literature Reviewmentioning

confidence: 99%

“…Even though opening up trade in the economy has helped increase productivity and growth in many high-income countries, many developing countries tended to be unsuccessful. In other words, trade openness does not necessarily imply increase in economic growth to all countries that have implemented trade openness (Zakariah & Pyeman, 2012).…”

Section: Introductionmentioning

confidence: 99%