Beyond Trade Liberalization: Export Diversification and Growth Limits in Resource-Dependent Transition Economies

This study examines the relationship between trade openness, export diversification, and economic growth in Central Asia and the South Caucasus over the period 2010–2024. Using panel data for seven countries, the analysis applies fixed and random effects models to evaluate both direct and interaction effects of trade and economic structure on growth. The results show that trade openness does not have a statistically significant direct impact on economic growth. Export diversification, proxied by manufacturing value added, demonstrates only weak evidence of influence. The interaction between trade openness and diversification is positive, suggesting that the benefits of trade may increase in more diversified economies; however, this effect is not statistically significant. In addition, foreign direct investment and inflation do not exhibit significant effects on growth, reflecting structural limitations and macroeconomic challenges in the region.