Cross- Country Investigation of the Impact of Trade Openness and FDI on Economic Growth: A Case of Developing Countries

Viengsaythong Dalaseng, Xiongying Niu and Khaysy Srithilat
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Viengsaythong Dalaseng: Business School, University of International Business and Economics (UIBE), Beijing, 100029, China.
Xiongying Niu: Business School, University of International Business and Economics (UIBE), Beijing, 100029, China.
Khaysy Srithilat: Faculty of Economics and Business Management, National University of Laos,Laos.

International Journal of Science and Business, 2022, vol. 9, issue 1, 49-73

Abstract: The goal of the study is to look at the relationship between trade openness and foreign direct investment (FDI) and economic growth in emerging countries. Secondary data were collected from the World Bank and FAOSTAT for the project. For the years 2000 to 2020, the statistics will include 105 developing nations. The STATA software application is used to analyze the panel data. The Hausman test was used to see if fixed impacts or random impacts calculations were preferable. The first empirical model, which was statistically significant at the 0.01 and 0.1 level of significance, found that gross national expenditure, gross capital, total trade openness, and labor were all positively related to economic growth. Population, on the other hand, was shown to have a negative relationship with economic development that was not statistically significant. Gross capital, gross national spending, exports of goods and services, and labor were all positively associated and statistically significant at the 0.01 and 0.1 level of significance in the second empirical model. Imports of products and services, on the other hand, were inversely connected with total population, but they were statistically significant at the 0.01 and 0.1 level of significance. Gross national spending, total trade openness, goods and services exports, gross capital, and labor were all positively connected with economic growth and statistically significant at the 0.01 and 0.1 level of significance in the third empirical model. Despite not being statistically significant, FDI was shown to be favorably connected with economic growth. Imports of products and services were shown to be adversely linked with economic growth, although statistically significant at the 0.01 level.

Keywords: Developing countries; Trade openness; Economic growth; FDI. (search for similar items in EconPapers)
Date: 2022
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