Abstract
MCom
In this study, the aim is to provide answers for the following questions: whether there is
any positive relationship between trade liberalisation and competitiveness of emerging
economies. How terms of trade affect economic growth in emerging market economies?
Finally, do the emerging market economies benefit from free trade in terms of accelerated
growth or they are actually harmed? There are two models used in this study to answer
the above questions; the first model is the growth model and the second one is the per
capita growth model. The first model determines the effects of terms of trade on the
overall economic growth, and the second one determines the share of such effect on the
population at large. In both models, panel data analysis is applied for eighteen emerging
market economies. Based on the economic theory and the results from all the models,
terms of trade does prove to have a positive effect on economic growth and standard of
living. It is also found that trade liberalisation does improve economic growth which in
turn leads to competitiveness. The findings indicate that there is convergence amongst the
developing economies. This means that the countries are growing together and emerging
economies can be expected to catch up with advanced economies.