Trade Openness and Structural Vulnerability in Least Developed Countries

This paper uses the measure of trade openness proposed by Squalli and Kenneth (2011) to investigate how it affects the Least Developed Countries' structural economic vulnerability. The latter is quantified by the EVI indicator developed by the United Nations Commission for Development Policy. Employing fixed effects estimation and controlling for several structural variables, we find prima facie evidence that a better integration of LDCs into the world trade - through both high trade share to GDP and a substantial interaction and interconnectedness with the rest of the world -, is likely to reduce their structural economic vulnerability.