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Paradox of trade openness: The moderated mediating role of governance

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  • Nam, Hyun-Jung
  • Bang, Jeongseok
  • Ryu, Doojin

Abstract

This study compares the impact of trade openness on gross domestic product (GDP) growth and human development in a panel of the Association of Southeast Asian Nations (ASEAN) member states. Our results indicate that trade openness has a positive effect on GDP growth but a negative effect on human development. To mitigate this negative impact of trade openness on human development, we propose the roles of governance and foreign direct investment (FDI). Governance plays a moderated mediating role and FDI has a mediating role, collectively strengthening the positive effect of trade openness on economic development.

Suggested Citation

  • Nam, Hyun-Jung & Bang, Jeongseok & Ryu, Doojin, 2023. "Paradox of trade openness: The moderated mediating role of governance," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 89(C).
    • Handle: RePEc:eee:intfin:v:89:y:2023:i:c:s1042443123001555
    DOI: 10.1016/j.intfin.2023.101887
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    More about this item

    Keywords

    Foreign direct investment; Governance; Gross domestic product; Human development; Trade openness;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • I39 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Other
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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