The importance of trade openness and logistics performance in economic growth: a Lasso-based approach

This study explores the impacts of logistics performance and trade openness on economic growth. The least absolute shrinkage and selection operator (Lasso) regression models were applied to perform variable selection for feature variables using logistics performance index (LPI), gross domestic product (GDP), and trade openness (OP) during the periods when LPI data were available from 2010 to 2018. The results reveal that infrastructure, timeliness, and trade openness are major factors that affect a country's economic growth. Moreover, interactive terms between trade openness and specific logistics indicators such as customs, infrastructure, and timeliness are statistically significant. The main policy implication is that continuous improvement in logistics infrastructure and timeliness leads to positive economic growth. Additionally, trade openness needs to be factored into logistics decision-making to better boost economic development because greater trade openness may not lead to economic growth due to negative interactive effects. © 2023 Inderscience Enterprises Ltd.