Openness and growth in emerging Asian economies: Evidence from GMM estimations of a dynamic panel

Abstract

With the progress of globalization, the openness-output nexus has drawn more attention than ever before. Results in this aspect, however, are inconclusive. Based on the average growth rate for the last two decades, we select 12 top performed Asian countries: Bangladesh, China, India, Indonesia, Korea Republic, Malaysia, Nepal, Pakistan, Philippines, Singapore, Sri Lanka, and Thailand. Working with these 12 emerging Asian economies over the 1971 to 2009 period, we find a positive and significant impact of openness on economic growth. The system GMM technique is used to overcome the shortcomings of endogeneity as found in most previous studies. While growth in labor force has insignificant effect on output growth, growth in capital stock exhibits a positive and significant impact on output growth. These findings have policy implications for other emerging economies of the world.

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