Life expectancy and trade openness: causality in Latin America

Abstract

Purpose: The aim of this research is to investigate the causal relationship between trade openness (TO) and life expectancy (LE) at birth in Latin American countries over the period of 1980–2014. Design/methodology/approach: The bootstrap panel Granger causality test proposed by Emirmahmutoglu and Kose (2011) was used to determine the direction of causality in the presence of cross-sectional dependency and heterogeneity among Latin American countries. Also, four different tests were employed in order to determine the cross-sectional dependency and slope homogeneity. The stationarity properties of variables were inspected by employing a unit root test. Findings: The findings indicated that Granger causality existed between TO and LE, at birth which was running from the former to the latter for panel. On a country basis, TO Granger caused LE at birth for countries with low level of economic development and higher taxes on income and profits. Practical implications: This study provides new insights for policymaking regarding the role of TO in achieving comprehensive economic reforms to increase LE at birth during a period of intense trade rivalry across nations. Originality/value: Although research in the literature has mainly focused on the impact of TO on LE at birth with panel data, most studies ignored the regional effects. It is the authors’ concern that the direction of causality can be country-specific and have regional characteristics. In this regard, instead of dividing countries for a specific region into two parts such as developing and developed, the authors investigated the pattern of trade–health link for a specific region, Latin America. © 2020, Emerald Publishing Limited.