Trade openness and economic growth: An empirical approach to G7 countries

With the rise of globalization in the world, trade openness plays an important role in enabling countries to trade more profitable and play an important role in the market. This is why the interaction between trade openness and economic growth is one of the most important issues for Economic Research. Many empirical and theoretical studies have been carried out to examine the relationship between trade openness and economic growth. Trade openness continues to contribute to this area to be evaluated with different perspectives. In this study, the trade openness will be examined first conceptually and theoretically, and the relationship between the trade openness theories and the trade openness and economic openness will be revealed in order to establish the relationship between trade openness and economic growth. Panel co-integration and panel causality analysis will be applied to the 1995-2017 gross domestic product, import, export and Export Import difference data set of the G7 countries (Canada, France, Italy, Germany, Japan, England, America), which are members of the WTO and one of the most developed countries in the world, provided by the OECD. Cross section dependency and unit root tests were applied before the panel cointegration test was applied. As a result of the analysis, it was concluded that economic growth could be realized through trade openness and this growth was mainly due to import-led. Keywords: Economic Growth, Panel Cointegration Test, Panel Causality Test, Trade Openness