Abstract
Relationship Between Commercial and Financial Openness and Economic Growth: GMM Panel Data Analysis
In a globalizing world, commercial and financial openness has increased its economic importance especially in the last half century. Commercial freedom allows countries to increase their international competitiveness and to have the technology they need. Financial openness provides economic opportunities to the economies of the country by regulating and developing financial markets and meeting the required foreign exchange needs. In this study, the effect of trade and financial deficit on economic growth in low, loer middle, upper middle and high income countries is analyzed. In the study, which used dynamic panel data method and analyzed the period between 1996-2017, trade openness has a positive effect on economic growth in low, loer middle, upper middle and high income countries. Financial deficit positively affects economic growth in low and high income countries, while it affects negatively in lower middle and upper middle income countries.
Keywords
Trade openness, Financial openness, Growth, Panel data analysis
