TOTAL FACTOR PRODUCTIVITY, TRADE OPENNESS, AND ECONOMIC GROWTH: EVIDENCE FROM G20 COUNTRIES
The intricate relationship between trade openness and economic growth has spurred extensive inquiry, yet
definitively establishing whether trade openness indeed fuels higher economic growth remains elusive. This
challenge stems from diverse methodologies and measures used in previous research. Analytical techniques and
proxies for trade openness, alongside inconsistent findings, hinder conclusive outcomes. Comprehending the
precise mechanisms linking trade openness and economic growth is complex, demanding meticulous empirical
scrutiny. Utilizing panel data from 1990 to 2019, this study employs an Ordinary Least Squares (OLS) regression
model to explore the interplay among trade liberalization, government size, capital, reserves, and GDP per capita
in G20 nations. The dependent variable is GDP per capita growth, while the independent variables include trade
openness, government size, capital, total reserves, and total factor productivity (TFP). This research hypothesizes
a substantial link between these factors and economic growth, aiming to bridge existing gaps and offer a
foundation for well-grounded economic strategies. By delving into this multifaceted relationship within a specific
time frame and employing robust econometric techniques, this study contributes to a nuanced understanding of
trade's ramifications for development. Its findings hold potential to guide evidence-based policymaking,
informing decisions that steer global economic progress.
TFP, Trade Openness, Economics growth, Panel Data, OLS