Journal of Economics and Development Studies

The Impact of Openness on Economic Growth: Case of Indian Ocean Rim Countries
Baboo M Nowbutsing

Abstract
This paper analyse the relationship between openness and economic growth for Indian Ocean Rim Countries in a panel data framework. The panel consists of 15 countries over the time period 1997 to 2011. Three measures of openness are used namely trade as a percentage of GDP, exports as a percentage of GDP and imports as a percentage of GDP. We adopt panel unit root and panel cointegration technique in this paper. All the variables are stationary in first difference. The statistics of Pedroni (2004) reveal the presence of long run relationship among the variables. Given the presence of cointegration, we use the Fully Modified Ordinary Least Square (FMOLS) to estimate our model. Ultimately, it is found that the three measures of openness positively affect economic growth. However, imports as a percentage of GDP has the highest impact on economic growth in terms of size.

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