TRADE OPENNESS AND UNEMPLOYMENT: A PANEL DATA ANALYSIS OF EMERGING ECONOMIES

Abstract

This research examines the effect of trade openness on unemployment in emerging economies using a panel of 24 emerging economies for the years 2005 to 2024 by applying panel regression and general method of moments (GMM) estimations. The findings suggest that trade openness is negatively linked with unemployment, which implies that the higher the level of openness will promote the employment growth in the acceleration of economic efficiency and expanding the market. Control variables including GDP growth, FDI and LFPRT also indicate negative link with trade openness while population growth indicates a positive relationship with unemployment demonstrating that the relationship is dynamic in a sense. Trade liberalization creates jobs, but there are still problems with structural unemployment and demographic pressures. The study ends with policy perspectives that can moderate the negative effects of trade openness on labor markets and promote inclusive and sustainable economic growth.