THE EFFECT OF TRADE OPENNESS ON ECONOMIC GROWTH IN EAST AFRICA: PANNAL DATA ANALYSIS

Abstract

The debate about the impact of Trade openness on economic growth is still open. Some argue that has a positive impact on the economy while others argue that it has either no effect, or has negative impact on the economy. The main purpose of this study is to examine the effects of trade openness on the growth of the economies of the 7 countries from east African. Data on relevant variables such as GDP, trade openness index, FDI, population growth rate, official exchange rate and HDI were acquired from secondary sources that constitute a time series of 18 years period (2000 to 2018).Data were analyzed using constitute a time series of 18 years period (2000 to 2018). Data were analyzed using panel data. The fixed effects model result suggested that trade openness have negative effects on economic growth. Whereas FDI, HDI, official exchange rate positively affects economic growth but population growth rate has not significant effect on economic growth. Finally the researcher recommends that policy makers should adopt policies on trade liberalization such as reduction of non-tariff barriers, reducing tariffs,