Unraveling the Interplay between Trade Openness

Abstract

Aim: The impact of trade openness on the economic development of countries is a subject that needs to be investigated. The aim of this study is to investigate the relationship between openness

total energy consumption

renewable energy consumption

government expenditure

and economic growth in Iran between 1980-2023. Method: In this study

short and long term coefficients were estimated using the ARDL bounds test. Additionally

the cointegration relationship between the variables was analyzed using the Hacker and Hatemi-J (2006) cointegration test. Findings: Empirical findings show that trade openness has a positive contribution to economic growth in the short and long term. Moreover

total energy consumption increases economic growth. However

the effect of renewable energy on economic growth is statistically insignificant. Additionally

government expenditure positively affects economic growth

which is supported by the Keynesian perspective. According to the bootstrap causality analysis results

there is a two-way causality relationship between trade openness and economic growth. In addition

government expenditure is the causal of economic growth. Conclusion: As a result of the findings

it is recommended to increase trade openness in Iran and to produce policies that will bring new international agreements and trade associations.