Impact of Trade Liberalization on Economic Growth in Developing Countries

Basit Ali, Farhad Nazari, Dr. Kiran Mustafa, Kamaran Qader Yaqub and Mazhar Ali Alyani
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Basit Ali: MPhil Economics, Kohat University of Science and Technology, Department of Economics, Pakistan
Farhad Nazari: Jiangsu University MBA
Dr. Kiran Mustafa: Assistant professor, Department of Economics, Abbottabad University of Science & Technology, Pakistan
Kamaran Qader Yaqub: Sulaimani Polytechnic University, Technical College of Administration, Department of Accounting Technique
Mazhar Ali Alyani: University of Sindh, Jamshoro, Pakistan

Bulletin of Business and Economics (BBE), 2024, vol. 13, issue 2, 1128-1133

Abstract: In order to investigate the impact of trade liberalisation on economic growth, this paper analyses the existing research on trade liberalisation and growth, revises the well-used Sachs and Warner (1995) trade liberalisation index for 193 countries up to 2010, and applies a dynamic growth model to a substantial panel data set covering the years 1985 to 2010. The results suggest that the impact of trade liberalisation on economic growth differs depending on the industrial development level of a country. Lower-middle-income countries, on average, experience a minimum 3% greater advantage from the liberalisation of trade compared to other growing nations. This finding provides a persuasive rationale for altering the conventional "Washington Consensus" methodology and taking into account the economic development phase while suggesting trade policy modifications.

Keywords: trade liberalization; economic growth; developing countries (search for similar items in EconPapers)
Date: 2024
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