The impact of Trade Openness on Economic Growth : A panel data analysis across advanced OECD countries

Sammanfattning: The role of trade flows in the modern economy has been brought to a focal point by the increased trade frictions, geopolitical tensions, countries exiting unions, pressures of global financial crises and the recent covid-19 pandemic. We, therefore, set out to examine the relationship between trade openness and economic growth among 31 advanced OECD countries between the period 2000 - 2018. Using a panel data analysis and utilizing a linear regression model with fixed effects, our findings show that trade openness has a positive and significant impact on economic growth. Our policy recommendation is that given a chosen level of economic integration, increasing investments can better leverage trade openness as a tool to enhance growth.