Abstract:
This paper has examined the relationship between trade openness and economic growth in the developing
countries in order to have a better understanding of the trade-growth relationship. Empirical analyses are carried
out through panel fixed effects estimation procedure, and data are utilized for two samples of the developing
countries for the period 1990-2009. The endogeneity issue of trade openness is handled through instrumental
variable. Our main finding is that the relationship between trade openness and economic growth is positive and
statistically significant. The impact of domestic investment, labour force, education, and democracy on
economic growth is also positive and statistically significant. The results also show that uncertain policies such
as frequent fluctuations in prices are detrimental to long-run economic growth. It recommended that the
developing countries should liberalize international trade, ensure macroeconomic stability, and pay favourable
attention to other determinants of economic growth in order to grow faster in the long-run.
