Macroeconomic Determinants of Trade Openness: Panel Data Analysis

Shabnam Naz; Sumra Akram; Dr. Zafir Ullah Khan

doi:10.36902/rjsser-vol4-iss2-2023(1-11)

Shabnam Naz MPhil Scholar, Department of Economics, The Women University, Multan, Pakistan.
Sumra Akram MPhil Scholar, Department of Economics, Women University AJK, Bagh.
Dr. Zafir Ullah Khan Assistant Professor, Department of Economics, UST Bannu.

DOI: https://doi.org/10.36902/rjsser-vol4-iss2-2023(1-11)

Keywords: GDP, FDI, Lending Interest Rate, Control of Corruption, Population.

Abstract

International trade may lead to a rise in economic development and create peace and stability in a country. Therefore, trade openness is an important source and could be measured in economic growth. Project management and motivation are also considered. The key objective of this study is to scrutinize the macroeconomic determinants of trade openness in developing countries. This study used developing countries’ panel data over the period of 1996–2020. Panel data usually contains unbalanced data. For unbalanced data, the im-Pesaran test is applied to check the stationarity, or unit root testing. Empirical results reveal that GDPG and FDI are direct and significantly associated to trade openness. Besides, the PSI, CC, LIR, and Pop have a negative impact on trade openness. Moreover, GDP growth and FDI have strongly affected trade openness and play an important role in boosting the economy through trade in developing countries therefore the government may liberalize the trade and encourage FDI to achieve the desired objectives.