This thesis focuses on how trade openness influences the average annual growth rates of developing countries in Latin America and Asia. We find that there is a positive correlation between trade openness and economic growth and this indicates the positive impact that can be made by governments through efforts to stimulate growth with trade. We construct a simple regression model to highlight the positive association between trade openness and economic growth and add several control variables such as initial GDP per capita and gross domestic investment. We use a sample of 33 developing countries in Asia and Latin America to test the relationships. Our results confirm a positive relationship between trade openness and growth, as well as a negative correlation between initial GDP per capita and economic growth which means that poorer countries grow faster. We also find a positive correlation between the level of investment and growth. In addition to testing the relationship between trade openness and rate of growth generally, we also conduct a regression to examine if there is a significant difference in this effect between Asia and Latin America. We introduce regional dummy variables and interaction terms into the new regression and find that the impacts of trade on growth are not significantly different between these two regions.

This study addresses some of the widely debated issues in the empirical education and trade literature in the context of India. Chapter 3 examines the impact of public education expenditure and trade openness on economic growth of India using aggregate or country level data. The estimation results indicate that public education expenditure has a positive effect on growth but the impact is not very robust and sensitive to different estimation methods. The major contribution of this chapter to the existing literature has been to establish the dynamism in India’s trade-growth nexus. The nature of the relationship between trade openness and economic growth of India has changed following the change in policy regime since the 1980s. In Chapter 4, I investigate the trade-growth nexus further by employing disaggregated level analysis. Firstly, I disaggregate GDP by agriculture, manufacturing and services sectors and try to check which sector benefitted most from trade openness. Secondly, I try to assess whether trade openness affects manufacturing sector growth at the Indian state level. The latter analysis has been conducted using panel model analysis for 22 states. Econometric analysis indicates that the effect of trade openness has been heterogeneous across sectors. Only the services sector seemed to have reaped the benefits of increasing openness, so far. Consequently, no significant relationship could be found between agricultural sector performance and trade openness. It seems that the agricultural sector suffers from gross underinvestment and its performance still relies heavily on the monsoon cycles. At the country level, manufacturing sector failed to take advantage of the trade openness but the picture of stagnancy is not uniformly true when we look at the state-level manufacturing performance. I therefore re-estimate the relationship between state-level manufacturing performance and state-level trade openness using state level data. The most notable contribution of this chapter to the existing literature has been the construction of trade openness indices for major Indian states. Overall, I find that there is a robust association between trade openness and manufacturing sector performance at the Indian state level. However, this relationship seems to be driven solely by the performance of the unregistered segment of Indian manufacturing. In Chapter 5, I disaggregate the public education expenditure data by primary, secondary and tertiary sectors and examine the nature of the relationship between each sectoral expenditure and growth. None of the sectoral education expenditure had any impact on growth when the analysis is carried out for the entire time period 1951-2011. Both school and tertiary education expenditure started to exert a positive impact on Indian GDP growth once the country started to shift from a state-led growth model to a pro-business regime from the early 1980s. Finally, I examine the determinants of public education expenditure by the state governments using panel data for 16 Indian states. The economic variables such as NSDP per capita and tax revenue came out to be statistically significant indicating that richer states spend more on education compared to their poorer counterparts. States with smaller child population share (0-14 years, as percentage of total population) managed to allocate more funds towards education than those with larger shares. No significant evidence was found to suggest that political factors such as corruption and political ideology of the ruling party affect education spending decisions in Indian states.

This dissertation investigates the casual relationship between trade openness and economic growth in a sample of 87 countries (developing & developed) during the period 1970-2013. According to the previous literature, the openness-growth relationship seems to be relatively unclear and inconclusive, although the general tendency is that openness has a positive impact on economic growth. Our empirical results confirm this ambiguous relationship and provide evidence which vary across model specification. Regarding of the per capita income regression for all countries, trade openness has a positive but not a robust impact on income, as the coefficient of openness is positive but at the same time insignificant. As far as growth regression is concerned, it seems that there is a positive relationship between openness and growth for all countries. More specific, for developing countries trade openness has a negative effect on income per capita and a positive one on income growth. On the other hand, a negative relationship between openness and income per capita and income growth presented in our results for developed countries.

The thesis examines the relationship between free trade and the economic growth in developing countries. The developments of a more integrated and globalized world challenges countries in new ways by easier access to information and technology, intensified competition and larger requirements on economic efficiency and increased productivity. It is important to examine if trade can induce economic growth, since long-run economic growth determine how living standards change, and provides an opportunity to improve the welfare and reduce the worlds poverty rates. Trade affects countries in different ways and developing countries have diverse growth experiences, where some countries have managed to increase their economic growth compared to others. The thesis presents trade policies and theories, and a brief overview of the controversies regarding trade. The relationship between economic growth and trade is dynamic and complex and trade can be used as a mean to benefit from technological transfers and knowledge spillovers, factors that have a substantial influence on economic growth, along with investments. A cross-section regression analysis is conducted to examine the relationship between trade openness and economic growth. The empirical results show a positive correlation between trade openness and economic growth in developing countries. High initial GDP and population growth are negatively correlated with GDP per Capita growth, while Rule of Law has a positive impact on GDP per Capita growth.

This thesis attempts to establish what determines financial development in Africa by making use of cross sectional and panel data techniques. Financial development, the dependent variable, is measured using the banking sector indicator liquid liabilities (M3) while trade openness, financial openness and the GDP growth rates are used as independent variables. The data used in this research ranges from 1975-200, though for the cross sectional analysis particular years (1975, 1985, 1995, and 2005) are focused on. The empirical results from both regression types generally suggest that trade openness has a significantly positive effect on Africa’s financial development. Cross-sectional results show that financial openness and the GDP growth rate are significantly negative in 2005. With the panel data results, financial openness is significantly negative in explaining financial development, while the GDP growth rate is insignificant suggesting that it is not an important determinant of financial development for African countries.

This thesis examines the impact of foreign direct investment (FDI) on Vietnamese economy based on Partial Adjustment Model and time series data from 1976 to 2004. FDI is shown to have not only short run but also long run effect on gross domestic product (GDP) of Vietnam. However, elasticity of GDP with respect to FDI is small and it will take many years to fully manifest itself. The impact of trade openness on GDP has also been examined and it is shown to be stronger than that of FDI. The paper offers a number of explanations and discusses briefly suggestions in order to increase the contribution of FDI to Vietnam’s economic development.

<p>This thesis attempts to establish what determines financial development in Africa by making use of cross sectional and panel data techniques. Financial development, the dependent variable, is measured using the banking sector indicator liquid liabilities (M3) while trade openness, financial openness and the GDP growth rates are used as independent variables. The data used in this research ranges from 1975-200, though for the cross sectional analysis particular years (1975, 1985, 1995, and 2005) are focused on.</p><p>The empirical results from both regression types generally suggest that trade openness has a significantly positive effect on Africa’s financial development. Cross-sectional results show that financial openness and the GDP growth rate are significantly negative in 2005. With the panel data results, financial openness is significantly negative in explaining financial development, while the GDP growth rate is insignificant suggesting that it is not an important determinant of financial development for African countries.</p>

Magister Commercii - MCom / This study examines the influence of trade openness on foreign direct investment (FDI) inflows in emerging market economies. The study focuses on a sample of 15 emerging market economies during 1992-2006. The econometric framework utilised in the study consist of panel data analysis, although the pooled OLS model is first estimated in order to give the reader a sense of what to expect in the main results. Using alternative estimation techniques, the study shows that, indeed, trade openness carries with it the potential of harnessing more FDI into emerging market economies but this need to be complemented by appropriate macroeconomic and sectoral policies. Notably, as the results of the study suggest, foreign investors generally consider the host country's market size, its labour market practices with respect to the real wage, and the current and expected rates of inflation, in order to invest in the country. The results from the study suggests that, given identical trade openness strategies, emerging market economies that have larger market sizes are likely to be more successful in attracting FDI than those with smaller market sizes. The evidence also suggests that, given identical trade openness strategies, emerging market economies that have lower real wages and lower price inflation are likely to be more successful in attracting FDI than those with high real wages and high or variable price inflation. Finally, the findings of this study do not provide strong evidence in support of the fact that infrastructural development, property rights and external debt matter in attracting FDI into emerging markets. The policy implications of this study for South Africa, which is currently contesting for FDI with the fast growing and relatively larger economies of Brazil, Russia, India and China (otherwise referred to as, BRICs), is that urgent attention needs to be given to the rising prices and wages provoked by increasingly strong unions, and weak anti-trust regulations in the country, in spite of a fairly successful inflation targeting framework adopted a decade ago.

The role of trade flows in the modern economy has been brought to a focal point by the increased trade frictions, geopolitical tensions, countries exiting unions, pressures of global financial crises and the recent covid-19 pandemic. We, therefore, set out to examine the relationship between trade openness and economic growth among 31 advanced OECD countries between the period 2000 - 2018. Using a panel data analysis and utilizing a linear regression model with fixed effects, our findings show that trade openness has a positive and significant impact on economic growth. Our policy recommendation is that given a chosen level of economic integration, increasing investments can better leverage trade openness as a tool to enhance growth.

<p>The present thesis tries to argue the importance of non monetary factors in explaining real exchange rate volatility. The main interest is on the effect of trade openness on real effec-tive exchange rate (REER) volatility. Based on theoretical studies I test the existence of a negative relationship between total trade share of an economy and the volatility of REER. Empirical evidence on a panel of 11 CEE and Baltic Countries for the 1995-2006 period confirms the relationship. The conclusion is that for these specific countries a large part of variation of the real exchange rate can be explained by openness of the respective economy to trade.</p>