Trade openness in economic performance: a comparative perspective of the world integration blocs

Trade openness and economic development are intrinsically connected. This study examines the relationship between trade openness and various aspects of economic performance of integration blocs using a sample of seven integration initiatives, including the European Union. Altogether, seven integration blocs represent 77 countries with macroeconomic data spanning 48 years, from 1974 to 2019. In this study, we apply a mixed-effect panel data regression analysis to empirically evaluate and discuss the effects of two trade openness strategies on a country’s economic performance—unilateral trade liberalization with the one-sided opening of market access, and reciprocal regional integration when both partners open up to each other. Our results demonstrate that trade openness is a key enabler or impediment for economic performance of countries, with nuanced variations in how specific performance indicators are affected across different integration blocs. We find that trade openness matters, with unilateral trade liberalization strengthening the effect of regional integration on the economic performance of regional blocs. At the same time, bilateral regional integration aiming at market access liberalization consistently outperforms unilateral approaches, enhancing various aspects of economic performance.