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External Openness and Economic Growth in Developing Countries
Author(s) -
Cieślik Andrzej,
Tarsalewska Monika
Publication year - 2011
Publication title -
review of development economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.531
H-Index - 50
eISSN - 1467-9361
pISSN - 1363-6669
DOI - 10.1111/j.1467-9361.2011.00639.x
Subject(s) - openness to experience , foreign direct investment , economics , developing country , panel data , estimation , international economics , investment (military) , growth theory , international trade , macroeconomics , econometrics , classical economics , economic growth , psychology , social psychology , management , politics , political science , law
Abstract This paper investigates empirically the relationship between two channels of external openness: international trade, foreign direct investment (FDI), and the rate of economic growth implied by the leader–follower model. The predictions of the theory are tested for the group of 97 developing countries in the period of 1974–2006 using static and dynamic panel data estimation methods. The estimation results show that both international trade and FDI positively contribute to growth.