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Trade Openness: An Australian Perspective

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  • SIMON GUTTMANN
  • ANTHONY RICHARDS

Abstract

Australia's external trade is relatively low compared with the size of its economy. Indeed, Australia's openness ratio (exports plus imports as a proportion of GDP) in 2002 was the third-lowest among the 30�OECD countries. This paper seeks to understand Australia's low openness by analysing the empirical determinants of aggregate country trade. We present an equation for country openness which explains a substantial amount of the cross-country variation. The most important explanators of openness are population and a measure of distance to potential trade partners. Countries with larger populations trade less, as do countries that are relatively more remote. Furthermore, after controlling for trade policy there is little evidence of a positive correlation between openness and economic development. The openness equation suggests that Australia's level of trade is relatively close to what would be expected. The most important factors in explaining Australia's low openness ratio are its large geographic size and distance to the rest of the world. Copyright 2006 The Authors Journal compilation 2006 Blackwell Publishing Ltd/University of Adelaide and Flinders University.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Australian Economic Papers.

Volume (Year): 45 (2006)
Issue (Month): 3 (09)
Pages: 188-203

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Handle: RePEc:bla:ausecp:v:45:y:2006:i:3:p:188-203

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Cited by:
  1. Michael Bleaney & Abelardo Salazar Neaves, . "Declining Distance Effects in International Trade: Some Country-Level Evidence," Discussion Papers 11/02, University of Nottingham, CREDIT.
  2. Michael Bleaney & Håvard Halland, . "The Resource Curse and Fiscal Policy Volatility," Discussion Papers 09/09, University of Nottingham, CREDIT.
  3. Ilya Bolotov & Kateřina Gajdušková, 2013. "Srovnání otevřenosti trhů Brazílie, Ruska, Indie a Číny a zemí střední a východní Evropy," Současná Evropa, University of Economics, Prague, vol. 2013(3), pages 9-34.

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