Trade Openness, Export Diversification, and Long-Run Economic Growth: Evidence from Developing and Emerging Economies

Abstract

Purpose: The study focuses on examining the impact of trade openness on the diversification of exports on the developing economies in long run basis. The objective involves in determining whether openness is effective enough in sustaining the growth, and whether diversification is effective as a transmission mechanism.
Design/Methodology/Approach: The study focuses on quantitative panel analysis, which was conducted with data from 16 developing countries, from 2017 to 2025. The various variables were economic growth, diversification of exports, investment, investment and human capital. The statistical techniques, such as Regression, Correlation Analysis, and Descriptive Statistics, are applied for the purpose of evaluating relationships.
Findings: The results showed that trade openness has a positive implication for citizen income level; however, they have a limited ability to drive growth. The diversification of exports in a developing economy suggested an improvement in resilience. The developing countries showed inefficiencies in respect to investment allocation, whereas human capital indicted positive influence.
Practical Implication: The findings showed that openness is required to be complemented through diversification, effective investment, and development of human capital in the developing countries.
Originality/Value: The contribution of the study is in joint basis where the importance and diversification in a long panel framework are shown. This offered a structural and institutional factor that coordinated the growth in the developing economies.