What are the impacts of Trade Openness on Economic Growth?

This study evaluates the impact of trade openness on economic growth and development. Both past theoretical and empirical research suggests that there should be a positive link between the two. This thesis reexamines this relationship by utilizing the most recent panel dataset using a sample of 139 upper middle-income and high-income countries during the recent 25-year (1994-2018) period. The relationship is estimated using panel instrumental variables fixed effects regression because the relationship between trade openness and growth suffers from reverse causality as countries with higher growth might just be more likely to become open. The estimations in this thesis does not provide robust support for the idea of a positive relationship between economic growth and trade openness.