Revisit the Nexus between Trade Openness and Economic Growth

Zitao Liu ()
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Zitao Liu: Beijing Normal University-Hong Kong Baptist University United International College

A chapter in Proceedings of the 2024 6th International Conference on Economic Management and Model Engineering (ICEMME 2024), 2025, pp 377-390 from Springer

Abstract: Abstract This study examines the complex relationship between trade openness and economic growth using a two-way fixed effects model on panel data from 153 countries from 2001 to 2021. Our findings challenge the conventional wisdom that trade openness universally promotes growth. We demonstrate that while trade volume positively correlates with economic growth, trade barriers also show a positive association. Moreover, trade barriers amplify the positive relationship between trade volumes and growth. These results suggest that countries should reconsider blanket trade liberalization policies and instead adopt nuanced approaches that balance openness with protective measures.

Keywords: International trade; economic growth; macroeconomics; empirical studies (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-690-1_37

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DOI: 10.2991/978-94-6463-690-1_37

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