The Relationship Between Trade Openness and Economic Growth in Libya: An Exploratory Analysis of Ten Non-Consecutive Observations, 2005–2020

Abstract

This study examines the relationship between trade openness and economic growth in Libya using ten non-consecutive annual paired observations available between 2005 and 2020: 2005–2008, 2012–2014, and 2018–2020. Five Excel workbooks were first audited for unit consistency, formula validity, missing values, and the construction of the trade-openness indicator. The analysis then employed descriptive statistics, Pearson and Spearman correlations, and ordinary least squares with both conventional and HC3 robust standard errors. The estimated openness coefficient was negative but statistically insignificant (β=-0.0521; HC3 p=.940), while the model explained only 0.18% of the observed variation in growth. Residual normality, RESET, and influence diagnostics further indicated a fragile linear specification. Because the observations are non-consecutive and the effective sample is very small, ADF, PP, ARDL bounds testing, Johansen cointegration, VAR, and CUSUM procedures were not estimated. Accordingly, the null hypothesis of no statistically significant linear relationship was not rejected for the available sample. This finding neither proves the historical absence of a relationship nor supports a causal interpretation. The study therefore recommends constructing a continuous, unit-consistent annual database before conducting dynamic or policy-oriented inference.