Economic Openness and Growth in Developing Economies: The Role of Institutional Quality
DOI:
https://doi.org/10.61506/01.00461Keywords:
economic openness, growth, developing countriesAbstract
This study demonstrates that FDI is a proven growth determinant, and trade openness also influences the effectiveness of FDI on growth. This is evident because countries with good institutional environment attracted more benefits through FDI and increased trade openness (welfare). We tested the hypothesis with a sample of 70 developing nations between 1984 and 2021 using a linear interaction model. The GMM results indicate economic growth FDI influence and trade openness expands in tandem with institutional factors. High-institution quality countries should gain more from MNC presence, as they will have fewer problems absorbing and internalising new technologies.
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