Trade Openness and Economic Growth: A Panel data Analysis of Asian Countries

This paper examines the relationship between trade openness and economic growth for a sample of 25 Asian economies during the period from 2005 to 2013 using country-level panel data and System Generalized Method of Moments technique. The estimation results find that openness in services trade has a negative and significantly significant effect on economic growth, while trade openness has a positive and statistically significant effect on economic growth for the Asian countries. Furthermore, we examine the openness-growth nexus based on a two-regime split between high- and low-income countries. The results indicate that the negative growth effects of openness in services trade are strong in the high-income countries, while these negative effects are weak in the low-income countries.