The Effect of Trade Openness on Human Development: Panel Data Analysis for OECD Member Countries
Chapter from the book: Bozgeyik, Y. (ed.) 2023. Academic Research and Evaluations in Social Sciences - IV.

Aylin Alkaya
Nevşehir Hacı Bektaş Veli University

Synopsis

Trade openness refers to the conduct of international trade. Human development can be seen as a measure of how free an individual is and how prosperous he or she lives. Human development is tried to be measured by the Human Development Index (HDI), which is published every year by the United Nations Development Programme (UNDP). Trade openness is often measured by countries' export and import levels. In the literature, it has been found that trade openness has a positive effect on human development. In the study, the effect of trade openness on human development across the member countries of the Organization for Economic Co-operation and Development (OECD) was tried to be investigated through panel data analysis. Model analysis was conducted using panel regression analysis. As a data set, balanced panel data of OECD member countries for the period 2000-2020 was included in the scope of the study. The dependent variable in the study was HDI, which is considered one of the measures of human development. The independent variable is the percentage of total exports and imports of goods and services in GDP as a measure of trade openness (TACIKLIK). In addition, in the study, control variables based on the literature were included in the panel regression model. As control variables, economic growth (EBUYUME), inflation (ENFLASYON), foreign direct investment (DYATIRIM), public health expenditures (SAGLIK), number of scientific and technical journal articles (BILIM), population growth (NUFUS) were added to the panel regression analysis model. In panel data analyses, F test, Breusch-Pagan test and Hausman test were applied to determine the model suitable for the data structure and the most appropriate model was determined to be the fixed effects model. In panel data analyses, F test, Breusch-Pagan test and Hausman test were applied to determine the model suitable for the data structure and it was determined that the most appropriate model was the fixed effects model. From the assumption analysis, it was concluded that there was autocorrelation, heteroscedasticity and inter-unit correlation. Based on these assumption reviews, the Driscoll and Kraay estimator was applied to the fixed effects model and it was determined that trade openness had an effect on human development. It has been determined that the variables TYATIRIM, SAGLIK, BILIM, NUFUS have a positive effect on the HDI, and the ENFASYON variable has a negative effect. It can be said that being open to trade plays an important role in increasing human development.

How to cite this book

Alkaya, A. (2023). The Effect of Trade Openness on Human Development: Panel Data Analysis for OECD Member Countries. In: Bozgeyik, Y. (ed.), Academic Research and Evaluations in Social Sciences - IV. Özgür Publications. DOI: https://doi.org/10.58830/ozgur.pub261.c1430

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Published

October 23, 2023

DOI