Causality between Openness and Indigenous Factors among World Economies

Abstract

The paper studies the causality relationship between economic openness and indigenous factors. The construction of the Openness Index and the Indigenous Index provides a measure on the extent of openness and indigenous development among world economies. The two indices are used to study their causality. The empirical findings show that there are bi-directional dynamic causality relationships between openness and indigenous factors. Indigenous factors help to forecast openness factors and vice versa