Trade openness, financial liberalization and economic growth

Adeel-Farooq, Rana Muhammad; Bakar, Nor Aznin Abu; Raji, Jimoh Olajide

doi:10.1108/sajbs-06-2016-0054

Cited by 25 publications

(28 citation statements)

References 48 publications

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“…Subsequent papers have also shown convincing evidence regarding the positive effects of trade openness on growth (Tahir and Azid, 2015; Tahir and Khan, 2014). Moreover, Adeel-Farooq et al (2017) also demonstrated a positive and significant relationship between trade openness and economic growth. The evidence provided in the aforementioned studies about the trade-growth nexus is clear and comprehensive.…”

Section: Literature Reviewmentioning

confidence: 88%

Does international trade promote economic growth? An evidence from Brunei Darussalam

Tahir

Hayat

2020

JCEFTS

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Purpose The purpose of this paper is to explore the potential impact of trade openness on economic growth for the economy of Brunei Darussalam. Design/methodology/approach Empirical analyses are conducted using the autoregressive distributed lagged model (ARDL) procedure and the data used were spanning from 1989 to 2018. Findings The obtained results indicated a positive and statistically significant relationship between trade openness and economic growth. Similarly, the results also revealed that domestic investment and natural resources positively impacted economic growth. Further, this paper found that human capital has impacted economic growth both negatively and significantly, which is against the prior expectation. Moreover, in the short-run, trade openness and domestic investment have lost its significance level while all other variables have maintained both their significance levels and signs of their coefficients. Practical implications This paper has provided comprehensive evidence regarding the relationship between trade openness and economic growth for Brunei Darussalam. Therefore, the policymakers of Brunei are suggested to take practical steps to gear up trade liberalization, and hence attain higher growth. Further, a favorable attention is also needed toward economic diversification and encouraging domestic investment to accelerate the long-run economic growth. Originality/value As this is a comprehensive study on the economy of Brunei Darussalam, therefore, this paper expects that the policymakers would find it useful while formulating and exercising suitable policies related to trade openness.

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Section: Literature Reviewmentioning

confidence: 88%

Does international trade promote economic growth? An evidence from Brunei Darussalam

Tahir

Hayat

2020

JCEFTS

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“…The study provides evidence of bidirectional causality between electricity consumption per capita and real capita income; conversely, direction of causality has significant policy implications. Adeel-Farooq et al (2017) found that trade openness and financial liberalization have positive impact only in the long run in the context of Pakistan. In addition, he found that a country can take benefits from liberalization of trade and financial sectors.…”

Section: Key Determinants Of Foreign Directmentioning

confidence: 97%

Estimating the key determinants of foreign direct investment flows in Pakistan: new insights into the co-integration relationship

Saleem

Shabbir

Aziz

et al. 2020

SAJBS

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PurposeThis empirical analysis tries to examine determinants of private foreign direct investment (FDI) in Pakistan using the bounds test approach. Main determinants of FDI among them are the size of the market (Q) macroeconomic stability (r), political stability (PRS), real exchange rate (REX) and institutional quality (INQ).Design/methodology/approachThis study used annual time-series data set starting from 1980 to 2016. This study has used time-series data with ARDL and error-correction model (ECM) and examined main determinants of FDI for Pakistan. The study used the Granger causality test (modified WALD test) to identify the causality among the variables.FindingsMoreover, empirical findings indicate the long-run relationship between GDP, trade openness and institutional quality toward FDI. However, political instability, inflation and real exchange rate harm FDI in Pakistan. Furthermore, results of Granger causality indicate that the bidirectional causality running from FDI and Q toward FDI is significant, providing evidence of FDI-led growth hypotheses in Pakistan. This study determines the correlation between FDI and Q (GDP growth) related to the “feedback hypothesis” in the short and long run. This study also concludes that the short-run causal connection among FDI, REX, PRS, r and Q follows the “feedback hypothesis.” This describes that FDI, REX, PRS, r and Q variables are jointly determined and affected together.Originality/valueThis study also explores the causal association between FDI and its significant determinants, by using methods of Granger causality test and the approach of Toda-Yamamoto-DoladoLutkephol (TYDL) to examine the causal relationship and its directions among these variables.

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“…The few current studies have discussed the relationship between FDI, trade and EG in selected Asian economies and selected MENA countries such as (Goh et al, 2017and Shabbir and Yaqoob, 2019, Kalai and Zghidi, 2017, Nguyen et al, 2020Adhikary, 2017). Adeel-Farooq et al (2017) empirically examine the effects of financial liberalization and TO on the EG for India and Pakistan. They use ARDL and principal component method to create an index for financial liberalization to examine how it affects the EG of the selected countries.…”

Section: Literature Reviewmentioning

confidence: 99%

The short-run and long-run dynamics among FDI, trade openness and economic growth: using a bootstrap ARDL test for co-integration in selected South Asian countries

Saleem

Shabbir

Khan

2020

SAJBS

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PurposeThe purpose of this study is to analyze the dynamic causal relationship between foreign direct investment (FDI), gross domestic product (GDP) and trade openness (TO) on a set of five selected South Asian countries.Design/methodology/approachThis study used newly developed bootstrap auto regressive distributed lags (ARDL) cointegration test to examine the long-run relationship among FDI, GDP and TO for selected South Asian countries for 1975–2016.FindingsThe economic growth (EG) is significantly related to TO for Bangladesh, India and Sri Lanka and the expansion of TO is crucial for growth in these countries. The results show that all countries (except Bangladesh) found the existence of long-run cointegration between FDI, GDP and TO, whereas FDI is a dependent variable. These results concluded that FDI and TO are contributing to EG in these selected countries.Originality/valueThis study is one of the first attempts to investigate the causal relationship and address the short and long dynamic among FDI, GDP and TO regarding five south Asian countries such as Bangladesh, India, Nepal, Pakistan and Sri Lanka.

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Trade openness, financial liberalization and economic growth

Cited by 25 publications

References 48 publications

Does international trade promote economic growth? An evidence from Brunei Darussalam

Does international trade promote economic growth? An evidence from Brunei Darussalam

Estimating the key determinants of foreign direct investment flows in Pakistan: new insights into the co-integration relationship

The short-run and long-run dynamics among FDI, trade openness and economic growth: using a bootstrap ARDL test for co-integration in selected South Asian countries

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