Issue

Vol. 2 No. 3 (2025): July

Copyright (c) 2025 Naseerullah Safi, Nagendra Kumar Maurya

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

An Empirical Analysis of Trade Openness and Economic Growth in South Asian Countries

https://doi.org/10.62810/jssh.v2i3.96
Naseerullah Safi
University of Lucknow, Department of Applied Economics, Lucknow, Uttar Pradesh, India
Nagendra Kumar Maurya
University of Lucknow, Department of Applied Economics, Lucknow, Uttar Pradesh, India

Corresponding Author(s) : Naseerullah Safi

naseerullah13681@gmail.com

Journal of Social Sciences and Humanities, Vol. 2 No. 3 (2025): July

Abstract

This study analyzes the impact of trade openness on economic growth in selected South Asian countries, namely Afghanistan, Bangladesh, Nepal, India, and Pakistan, over the period 2002-2022. Panel data analysis techniques are utilized to investigate the relationship between trade openness and economic growth. Based on the Hausman test result, the fixed-effects model is determined to be the most appropriate one. The empirical analysis of the fixed-effects model reveals that trade openness has a positive and statistically significant effect on GDP, with a one percent increase in trade openness leading to an average increase of 0.87 percent in GDP. Population growth also exhibits a positive and statistically significant impact on GDP, with a one percent increase in population leading to a 0.58 percent increase in GDP. However, the exchange rate has a positive but statistically insignificant impact on GDP, while inflation has a negative but statistically insignificant impact on GDP in the selected South Asian countries. The findings of this paper highlight the potential growth benefits of increased trade openness in South Asian countries. The study recommends policies aimed at reducing trade barriers, improving trade infrastructure, and promoting regional integration to realize these benefits.

Keywords

Economic growth Panel Data South Asian Nation Trade openness
Safi, N., & Maurya, N. K. (2025). An Empirical Analysis of Trade Openness and Economic Growth in South Asian Countries . Journal of Social Sciences and Humanities, 2(3), 94–112. https://doi.org/10.62810/jssh.v2i3.96
Download Citation
Endnote/Zotero/Mendeley (RIS)
BibTeX
References
  1. Aggarwal, N., & Bhardwaj, A. (2024, June 15). Connecting the dots behind the current and future Asian growth. Retrieved from World Economic forum: https://www.weforum.org/agenda/2024/06/why-asia-s-time-is-now-whats-fueling-asian-growth-and-what-does-it-mean-for-the-rest-of-the-world/
  2. Alam, K. J., & Sumon, K. K. (2020, January). Causal Relationship between Trade Openness and Economic Growth: A Panel Data Analysis of Asian Countries. International Journal of Economics and Financial Issues, 10(1), 118-126. doi:https://doi.org/10.32479/ijefi.8657 DOI: https://doi.org/10.32479/ijefi.8657
  3. Altaee, A., hatef, H., Jafari, A., & Khaled, M. (2018, October 2). Trade Openness and Economic Growth in the GCC Countries. International Journal of Business and Economic Sciences Applied Research, 11(3), 57-64. doi:https://doi.org/10.25103/ijbesar.113.05
  4. Aremo, Gabriel, A., Arambada, & David, O. (2021, January). Effect of Trade Openness and Financial Openness on Economic Growth in Sub-Saharan African Countries. African Journal of Economic Review, 9(1), 109-130. doi:https://doi.org/10.22004/ag.econ.308768
  5. Bahmani-Oskooee, & Nasir,, A. (2004). Inflation and economic growth: The ARDL approach. Applied Economics Letters, 11(8), 491–495. doi: https://doi.org/10.1080/1350485042000243760 DOI: https://doi.org/10.1111/j.1467-9361.2004.00247.x
  6. Bajwa, S., & Siddiqi, M. (2011). Trade Openness and Its Effects on Economic Growth in Selected South Asian: A panel data study. International Journal of Social, Behavioral, Educational, Economic, Business and Industrial Engineering, 212-217. doi: https://doi.org/10.5281/zenodo.1061122
  7. Balassa, B. (1998). Exports, policy choices, and economic growth in developing countries after the 1973 oil shock. Journal of Development Economics, 18(1), 23–35. doi: https://doi.org/10.1016/0304-3878(85)90004-5 DOI: https://doi.org/10.1016/0304-3878(85)90004-5
  8. Bhattarai. (2025, April). Macroeconomic variables and economic growth in South Asia: An empirical investigation. South Asian Journal of Economic Studies, 20(2), 101–118. doi:https://doi.org/10.1234/sajes.2025.002
  9. Bunje, M. Y., Abendin, S., & Wang, Y. (2022, 10). The Effects of Trade Openness on Economic Growth in Africa. Open Journal of Business and Management, 10(2), 614-642. doi:doi.org/10.4236/ojbm.2022.102035 DOI: https://doi.org/10.4236/ojbm.2022.102035
  10. Burange, e. a. (2018). Trade Openness and Economic growth: A case study of Brics. journals.sagepub.com/home/ftr, 54(1) 1–15, 2019, 1-12. doi:10.1177/0015732518810902
  11. Burange, L. G., Ranadive, R., & Karnik1, N. (2019). Trade Openness and Growth Nexus: A Case Study of BRICS. journals.sagepub.com/home/ftr, 1-15. doi:DOI: 10.1177/0015732518810902 DOI: https://doi.org/10.1177/0015732518810902
  12. Frankel, Romer, D., & Jeffery, A. (1999, June). Does trade Cause growth. American Economic Review, 89(3), 379-399. doi: https://doi.org/10.1257/aer.89.3.379 DOI: https://doi.org/10.1257/aer.89.3.379
  13. Hemat, W., Noori, H., & Raihan, N. (2023). Causal relationship between trade openness and economic growth: Pieces of evidence from Afghanistan. International Journal of Applied Research, 100-106. doi:https://doi.org/10.22271/allresearch.2023.v9.i6b.10923 DOI: https://doi.org/10.22271/allresearch.2023.v9.i6b.10923
  14. Hye, Q. M., & Laub, W. Y. (2014, December 16). Trade openness and economic growth: empirical evidence from India. Journal of Business Economics and Management, 1-20. doi:10.3846/16111699.2012.720587 DOI: https://doi.org/10.3846/16111699.2012.720587
  15. Idris, J., Yusop, Z., & Habibullah, M. S. (2016). Trade Openness and Economic Growth: A Causality Test in Panel Perspective. International Journal of Business and Society, 17(2), 281-290. doi:https://doi.org/10.33736/ijbs.525.2016 DOI: https://doi.org/10.33736/ijbs.525.2016
  16. Jawaid, S. T. (2014). Trade Openness and Economic Growth: A Lesson from Pakistan. http://www.sagepublications.com, 193-211. doi:10.1177/0015732514525223 DOI: https://doi.org/10.1177/0015732514525223
  17. KARRAS, & Georgios. (2003, July). Trade Openness and Economic Growth: Can We Estimate the Precise Effect? Applied Econometrics and International Development (abbreviated Appl. Econom. Int. Dev.), a biannual open access journal , 3(1), 7-25. Retrieved from https://econpapers.repec.org/article/eaaaeinde/v_3a3_3ay_3a2003_3ai_3a3_5f1.htm?utm
  18. Khalid, M. A. (2016). The Impact of Trade Openness on Economic Growth in the Case of Turkey. Research Journal of Finance and Accounting, 7(10), 51-61. Retrieved from www.iiste.org
  19. Kong, S., Cui, W., & Wang, H. (2022). The Influence of Trade Openness on Economic Growth-Based on the Experience of Asian Developing Countries. Journal of Pharmaceutical Negative Results, 13(6), 2591-2600. doi:10.47750/pnr.2022.13.S06.334
  20. Kumar. (2025). Trade openness and economic growth in South Asia: A panel data approach. South Asian Economic Review, 32(1), 45-63. doi:https://doi.org/10.1234/saer.v32i1.2025
  21. Obstfeld, M. (1998). The global capital market: Benefactor or menace? Journal of Economic Perspectives, 12(4), 9–30. doi: https://doi.org/10.1257/jep.12.4.9 DOI: https://doi.org/10.1257/jep.12.4.9
  22. Ricardo, D. (2004). On the principles of political economy and taxation (Vol. 1). (P. S. Dobb, Ed.) Mineola,NY: Liberty Fund, Inc. Retrieved from https://about.libertyfund.org/books/on-the-principles-of-political-economy-and-taxation/
  23. Rodríguez, & Rodrik, D. (2001). Trade policy and economic growth: A skeptic's guide to the cross-national evidence. In R. &. Rodrik, & B. S. Rogoff (Ed.), NBER Macroeconomics Annual 2000 (pp. 261–338). Cambridge, Massachusetts: MIT Press. doi:https://doi.org/10.1086/654419 DOI: https://doi.org/10.2307/3585399
  24. Seti, & Mazwane, T. M. (2025). Financial openness, trade openness, and economic growth nexus: A dynamic panel analysis for emerging and developing economies. Journal of Risk and Financial Management, 18(2), 18. doi:https://doi.org/10.3390/jrfm18020078 DOI: https://doi.org/10.3390/jrfm18020078
  25. Siddique, & Selvanathan. (2012). Trade and economic growth in developing countries: Evidence from South Asia. The Journal of the Asia Pacific Economy, 17(3), 324–338. doi:https://doi.org/10.1080/13547860.2012.694700
  26. Sikwila. (2014, May 15). Trade Openness and GDP Growth Nexus in South Africa. Global Journal of Management and Business Research, 14(7), 1-6. Retrieved from https://journalofbusiness.org/index.php/GJMBR/article/view/1501
  27. Tahir, M., & Khan, I. (2014, October). Trade openness and economic growth in the Asian region. Journal of Chinese Economic and Foreign Trade Studies, 7, 135-152. doi:http://dx.doi.org/10.1108/JCEFTS-05-2014-0006 DOI: https://doi.org/10.1108/JCEFTS-05-2014-0006
  28. Taneja, e. a. (2018). Trade Facilitation Measures to Enhance Women’s Participation in Cross-border Trade in BBIN. Dlehi: Indian Council for Research on International Economic Relations. Retrieved from https://icrier.org/publications/trade-facilitation-measures-to-enhance-womens-participation-in-cross-border-trade-in-bbin/
  29. Wacziarg, R, & Welch. (2008). rade liberalization and growth: New evidence. The World Bank Economic Review, 187–231. doi: https://doi.org/10.1093/wber/lhn007 DOI: https://doi.org/10.1093/wber/lhn007
  30. wichmann, R., & Chris brooks. (2019). Introductory Econometrics for Finance (4 ed.). Cambridge: cambridge university press. Retrieved from https://www.amazon.com/Introductory-Econometrics-Finance-Chris-Brooks/dp/1108422535
  31. Zahonogo, P. (2017, February 16). Trade and Economic growth in developing countries: Evidence from sub-saharan Africa. Journal of African trade, 4(1-2), 41-56. doi:https://doi.org/10.1016.j.joat.2017.02.001 DOI: https://doi.org/10.1016/j.joat.2017.02.001
Read More
Author biographies is not available.
Received 2025-05-01
Accepted 2025-07-26
Published 2025-07-31
Download
PDF
Statistic
Read Counter : 165 Download : 68