Trade openness and child health: a heterogeneous panel cointegration analysis

ABSTRACT

In this paper, we examine the impact of trade openness on child health, based on a cross-country panel data set covering 66 countries for the period 1960–2013. To account for the time-series properties of the data and potential cross-country heterogeneity in the impact of trade openness, the study employs heterogeneous panel cointegration techniques that are robust to omitted variables and endogeneity problems. The results reveal that trade openness and child health are cointegrated, and that trade works to reduce the child mortality rate significantly in the long-run. The results are robust to the methodology and trade openness and child health indicators employed, as well as to the presence of cross-sectional dependence and changes in the sample composition. The findings also suggest that the impact of trade on child health tends to be stronger in countries with better institutional quality, lower corruption, good governance, political stability, and sound policies that promote private sector development.