Innovative and Economics Research Journal Volume 11, No. 2, 2023 www.economicsrs.com Open Access Journal IMPACT OF TRADE OPENNESS, HUMAN CAPITAL THROUGH INNOVATIONS ON ECONOMIC GROWTH: CASE OF THE BALKAN CO UNTRIES Siniša Kurteš 1 , Srđan Amidžić 2 , Drago Kurušić 3 , Received 04.03.2023. Sent to review 14.03.2023. Accepted 29.06.2023. Original article 1 Faculty of Economics, University of Banja Luka, Bosnia and Herzegovina ORCID: 0000-0001-5894-8660 2 Faculty of Economics ,University of Banja Luka, Bosnia and Herzegovina ORCID: 0000-0001-5694-3567 3 Elit Fair LLC, Banja Luka, Bosnia and Herzegovina ORCID: 0000-0003-1104-5880 Corresponding Author: Siniša Kurteš Email: sinisa.kurtes@ef.unibl.org JEL: O11, O57, F14, F43 Doi: 10.2478/eoik-2023-0047 UDK: 005.96:339.137]:338.22 ABSTRACT The importance of trade openness and human capital for the economic growth of countries is the subject of many studies today. The role of innovations and the innovativeness of economies in modern economic development is extremely important. With greater accumulation of human capital, knowledge, skills and innovation are accumulated. All these variables are crucial for achieving higher economic growth. Special attention in the studies of relevant authors is directed towards researching this relationship on the example of small open economies, as well as developing countries. The purpose of this paper is to examine the relationship between trade openness and human capital as explanatory variables and GDP as a dependent variable in a sample of eight Balkan countries. The goal of the research is to quantify the relationship between two independent variables and GDP as a dependent variable. The period in which we observe this relationship covers the period from 2000 to 2019. Achieving the research objective is done on the basis of a panel model with fixed and random effects. The results of the panel research testify to the existence of a positive relationship between trade openness and human capital as independent variables and GDP as a dependent variable. Calculated coefficients with independent variables were obtained with a high level of statistical significance. The conclusion of the research implies that there is a positive impact of trade openness and human capital on GDP. Keywords: trade openness, human capital, innovations, economic growth, GDP 1. INTRODUCTION The example of the development of East Asian economies from the 80s of the last century is taken in the literature today as an example of economic development based on export orientation, increased openness of the economy and investment in human capital. Stiglitz (1996) states that the success of the development of East Asian economies is partly attributed to their openness. In addition to the openness of these economies, the process of accumulation of human capital and industrialization took place in parallel. The experiences of East Asian countries undoubtedly highlight that industrialization can be achieved without relying on the domestic market (Krueger, 1997). More recent, endogenous theories of economic growth include free trade and human capital as significant determinants of economic growth. At the beginning of the nineties of the last century, a large number of important