Effect Of Trade Openness On Developing Countries - 1591 Words

2. METHODOLOGY 2.1. DATA In this study, panel data for 25 developing countries is used for the years 2000, 2005 and 2010. These countries are listed separately in appendix ‘A’. The World Bank list of developing countries was referred to but data for these three particular years was available for 25 out of 145 countries. All the variables that were used in our model were sourced from the World Bank’s World Development Indicators 2013. The description of variables is given in appendix ‘B’.The descriptive statistics of the variables are presented in appendices ‘C’ and ‘D’. 2.2. FRAMEWORK AND TECHNIQUE We estimate two models in this paper viz. a single equation random effect panel regression model and a two equation instrumental variable panel regression model, both for the years 2000, 2005 and 2010. First, we estimate the single equationmodel. The aim of this model is to find out the effect of trade openness directly on poverty in developing countries. The following equation is estimated: p = a + b1 (tra) + b2 (infr) + b3 (edu) + b4 (health) + b5 (gdpcap) + e(1) where, ‘p’ is poverty headcount ratio at $1.25 a day (PPP). The ‘tra’ is the trade opennessmeasured as total trade as percentage of GDP. ‘infr’ is the infrastructure variable which is represented by telephone lines and mobile cellular connections per 100 people. ‘edu’ is the levels of education which is represented by primary completion rate. This indicator is also known as gross intake rate to the last gradeShow MoreRelatedThe Impact Of Technological And Commercial Effects On Economic Growth1642 Words   |  7 Pages(international) trade which enables exchange and consumption of goods and services which they cannot produce, thereby enjoying variety of goods and services to improve the standard of living of their people. Some of the positive effects International trade (IT) have on economic growth (EG) were pointed out by Smith (1776) and this idea triumphed until World War II. 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