Trade Liberalization’s Influence on Health Status in Developing Economies: Theoretical Insights and Real-World Implications

Tonmoy Chatterjee, Soumyananda Dinda (), Nilendu Chatterjee and Ghirmai Tesfamariam Teame
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Nilendu Chatterjee: Bankim Sardar College, India
Ghirmai Tesfamariam Teame: College of Business and Social Sciences, Eritrea

Journal of Economic Development, 2024, vol. 49, issue 3, 1-31

Abstract: This paper examines the health status of developing nations in the context of liberalization. In the existing literature, trade openness and foreign direct investment (FDI) are often considered substitutes, with one being prioritized over the other to address health issues in developing countries (Chatterjee et al., 2022). Our study presents new evidence by viewing trade openness and FDI as complementary. Theoretically, we use a general equilibrium trade model based on the Heckscher-Ohlin-Samuelson-Venak framework, while static and dynamic panel data approaches are applied empirically. Our sample includes 51 developing countries across Asia, Africa, and Latin America from 1980 to 2019. The findings provide policy recommendations that emphasize trade liberalization to improve health outcomes, particularly life expectancy and infant mortality. Additionally, health-specific trade liberalization is suggested for African and Latin American nations, as economic growth through liberalization can strengthen domestic health infrastructure.

Keywords: Health Status; Foreign Direct Investment; Openness; International Trade; Panel Data (search for similar items in EconPapers)
JEL-codes: C23 D58 F11 F13 I11 I15 (search for similar items in EconPapers)
Date: 2024
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