The relationship between openness and economic growth is also a widely researched area in applied economics.
The theoretical framework that formally relates openness to trade to economic growth is provided by Grossman &
Helpman (1991). In this framework, openness to trade is seen as having a positive impact on economic growth
primarily by facilitating technology spillovers, which, in turn, would increase productivity, international
competitiveness, and export revenues. Other theoretical explanations in the line of the Singer-Prebisch thesis, on the
other hand, suggest that trade openness might have a negative impact on growth, particularly in the case of lowincome
developing countries. By and large, this alternative view is based on the idea that the structural
characteristics of low-income developing countries tend to reverse the terms of trade at their disadvantage.
Theoretically, therefore, causality between openness to trade and economic growth can run on both directions (see
Vlastou 2010).