Measuring and Analyzing the Impact of Trade Openness on Economic Growth in Selected Developing Countries during the Period 1995–2023 Using Panel Data Models

Abstract

The study aims to measure and analyze the impact of trade openness on economic growth in a selected group of developing countries during the period 1995–2023, and to verify the significance of this impact both statistically and economically. The study is based on the hypothesis that trade openness exerts a positive and significant effect on economic growth in these countries. To achieve the objectives of the study, the descriptive-analytical approach was employed to present the theoretical and conceptual framework of trade openness and economic growth, and to review the economic literature addressing the reciprocal relationship between them. In addition, an applied (deductive) approach was used to measure the impact of trade openness along with other economic and institutional factors on economic growth, using panel data models that combine both time series and cross-sectional dimensions, which enhances the efficiency and statistical accuracy of the estimates. The results confirmed the validity of the study’s hypothesis, revealing that trade openness has a positive and statistically significant impact on economic growth in the developing countries under study. The estimates indicated that a 1% increase in trade openness leads to a 0.062955% increase in real economic growth. Accordingly, the study recommends continuing to adopt balanced trade liberalization policies that promote the integration of developing economies into the global economy, while working to diversify the productive base to reduce over-dependence on a limited number of foreign goods or markets, in order to ensure sustainable and inclusive economic growth.