Openness of the Economy, Diversification, Specialization, and Economic Growth

Abstract

This article examines whether openness of the economy promotes production diversification or production specialization and whether or not specialization/diversification spurs economic growth. International trade is important to stabilize and promote economic growth. However, promotion of international trade does not necessarily cause economic growth. This article focuses on the existence empirical patterns of production diversification/specialization between international trade and economic growth. The empirical results show that greater openness of the economy does not always mean the greater economic growth in emerging and developing countries. Economic conditions and market structures related to international trade must be considered carefully to achieve the economic growth.