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Investigating the Influence of Economic and Socio-Political Openness on Growth

Author

Listed:
  • Lena Malešević-Perović

    (University of Split, Faculty of Economics, Cvite Fiskovića 5, 21000 Split, Croatia)

  • Vladimir Šimić

    (University of Split, Faculty of Economics, Cvite Fiskovića 5, 21000 Split, Croatia)

  • Vinko Muštra

    (University of Split, Faculty of Economics, Cvite Fiskovića 5, 21000 Split, Croatia)

Abstract

This paper investigates the influence of international openness on economic growth in a sample of 32 European economies. The usual approach in the literature on the topic is to observe the impact of trade openness on growth. We, however, broaden this standard approach and analyse not only economic aspect of openness but also socio-political aspect. In our empirical analysis we use the TSLS (two stage least squares) estimator, whereby in the first step we use the standard growth regression that includes, among other variables, openness, and in the second step we include different determinants to instrument openness. Our research, in general, shows that openness is an important determinant of growth in a set of investigated countries. Trade openness and financial openness influence growth positively. The influence of institutions on growth is manifested mainly indirectly – through its influence on trade and financial openness.

Suggested Citation

  • Lena Malešević-Perović & Vladimir Šimić & Vinko Muštra, 2013. "Investigating the Influence of Economic and Socio-Political Openness on Growth," International Journal of Business and Economic Sciences Applied Research (IJBESAR), International Hellenic University (IHU), Kavala Campus, Greece (formerly Eastern Macedonia and Thrace Institute of Technology - EMaTTech), vol. 6(3), pages 35-59, December.
    • Handle: RePEc:tei:journl:v:6:y:2013:i:3:p:35-59
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    References listed on IDEAS

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    More about this item

    Keywords

    openness; growth; EU; institutions;
    All these keywords.

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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