Trade Openness And Economic Growth Revisited

Abstract

Our study attempted to establish how positive and how robust the relationship between average economic growth rate and the pace at which exporting activity grows using Extreme Bounds Analysis on Dollar's (1992) 95 nation openness index.  Our results indicate that not only there is indeed such a positive and robust relationship, but there is also an equally robust but negative relationship between average economic growth rates and the real exchange rate distortion index, as well as a positive and robust effect between export share of GDP with the investment share in GDP, which in turn is robustly linked to output growth and GDP expansion.