Trade openness and economic growth:Empirical evidence from Lesotho

Malefa Malefane and Nicholas Odhiambo

No 25767, Working Papers from University of South Africa, Department of Economics

Abstract: This paper examines the dynamic impact of trade openness on economic growth in Lesotho using the autoregressive distributed lag (ARDL) bounds testing approach. The study employs four indicators of trade openness, which include three trade-based proxies and an index of trade openness. The empirical results of this study show that trade openness has no significant impact on economic growth in both the short run and long run irrespective of which proxy of trade openness is used. These empirical results have important policy implications for Lesotho. Among others, this study suggests that the policymakers adopt policies aimed at boosting human capital and infrastructural development so that the economy grows to a threshold level required to reap the benefits of trade openness in its various forms. The policymakers should also pursue policies that enable the expansion in both international trade and economic growth, such that beneficial growth effects can be realized from trade with no exclusions.

Keywords: Trade Openness, Economic Growth; ARDL; Exports; Imports; Lesotho (search for similar items in EconPapers)
Date: 2019-09
New Economics Papers: this item is included in nep-gro and nep-int
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Trade Openness and Economic Growth: Empirical Evidence from Lesotho (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:uza:wpaper:25767

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