Trade Liberalization, Openness, and Economic Growth in Sri Lanka: A Co-Integration Analysis

Nirodha De Silva, Benaissa Chidmi, Jeff Johnson


This study attempted to show the
relationship between trade liberalization and
economic growth in Sri Lanka over the period of
1960-2010. This paper empirically estimated the
causality relationship between trade openness and
economic growth by employing co-integration and
Granger –causality tests. The analysis supports the
long run relationship between trade openness and
economic growth. This study also concluded
investments and Free Trade Agreements are
significant and positively related to the economic
growth and showed that both factors are feasible in
sustaining economic growth in Sri Lanka.


Trade Liberalization, Trade Openness, Economic Growth, Investment, Free Trade Agreements, Co-integration, Causality, Error Correction Model, Sri Lanka

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