The Nexus of Trade Openness, Institutions and Economic Growth: An Empirical Investigation of BRICS Countries

Abstract

The empirical limits of this study lie in investigating the nexus between trade openness, institutional quality and economic growth in emerging BRICS countries. Having nascent institutions, the study aims to analyse their role in determining the trade–growth relationship. Using endogeneity expunging GMM technique, the empirical evidence shows—first, imports play a crucial part in augmenting growth. While exports and overall trade openness do show a positive impact, they lack the statistical significance. Second, institutional infrastructure shows an indirect effect by augmenting the economic performance when complemented with higher imports. These countries stand to gain more from imports with improved institutional infrastructure. JEL Codes: F10, O4, C23