The Impact of Trade Liberalization on Human Development Index in Selected Countries

Trade liberalization is the removal of restrictions created by policymakers on the way of macroeconomic variables in the market. Trade liberalization leads to more specialization in production, division of labor, and increase in income. In turn, increase in income results in educational opportunities, better health and medical care services, and provision of more favorable social services by governments. Moreover, trade promotion improves the cultural interactions, and increases the variety of goods available to consumers. Trade introduces new types of goods and services, such as medical and sanitary equipment, to domestic markets. Thus, the health and longevity of individuals increase, and affect the human development index. Trade liberalization can reduce government tax revenues and tariffs. Reduction in government revenues affects the quality and quantity of public government services, such as education, health, and decreases the human development index. Trade promotion can also impose adverse effects on environment and sustainable development. In this regard, this paper aims to examine the effect of trade liberalization level on human development index in a group of selected middle-income countries during the period 2000-2015. The results of models estimated by the fixed effects method indicate that the trade liberalization has a positive and significant impact on the human development index