Inter-Linkages among Trade Openness, Human Development and Economic Growth: A Case Study of SAARC Countries

This paper examines the relationship between economic growth and the human development index and trade openness. in first model and impact of economic growth on trade openness for SAARC countries considering panel data from 1995 to 2022. In order to test the stationarity of variables cross sectional IPS is used which is second generation unit root test. Fixed effect test is used to find the relationship between trade openness and human development and economic growth. Additionally, for robustness, we also calculated a CS-ARDL model, which is crucial for handling unobserved common factors and heterogeneous slope coefficients. We employed the Breusch and Pagan (1980) and Pesaran (2004) tests to determine whether or not the model's residuals were cross-sectionally dependent, and we utilized the Pesaran and Yamagata (2008) homogeneity test to confirm the heterogeneity among the sample countries. According to Model 1, a one percent increase in openness will greatly boost GDP by 0.0832 percent, and a one percent increase in foreign direct investment will significantly boost GDP by 0.0231 percent. Model 2 showed that there exist a positive and significant relation between openness and GDP, and between openness and FDI.