Optimization-Based approaches to international trade and economic development: An econometric analysis of emerging economies

Abstract

International trade is a key factor of economic development. For many emerging economies, strong international trade means better ongoing growth, more diverse industries, and better global positioning and competitiveness. Recently, optimization-based methods have been integrated into trade policy and economic planning. These methods enable governments and firms to distribute resources, trade costs, and welfare impacts more strategically. This study aims to analyze the link between these policies and emerging economies' trade and economic development. This research intends to conduct an econometric study on the impact of trade related factors such as openness, foreign direct investment (FDI), logistics performance, export diversification, and institutional quality on economic growth. The study designed a panel dataset of 20 emerging economies for the time period 2005-2024. The study intends to conduct a panel regression study based on Fixed and Random Effects models to assess how trade related factors impact the growth of Gross Domestic Product (GDP). The data show that trade openness, export diversification, and efficient logistics positively impact economic growth. Foreign direct investment positively impacts development through the transfer of technology and increased productivity. The positive impact of institutional quality on the efficacy of trade strategies that are based on optimization is due to reduced transaction costs and increased market efficiency.