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Multilateral trade liberalization and developing countries’ economic exposure to shocks

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  • Sena Kimm Gnangnon

Abstract

Purpose - The purpose of this paper is to examine the impact of multilateral trade policy (MTP) liberalization on developing countries’ economic exposure to shocks. Design/methodology/approach - The analysis is conducted on a panel data set comprising 120 countries over the period 1996–2013 and uses the within fixed effects estimator. Findings - The empirical results suggest that over the entire sample as well as sub-samples of least developed countries (LDCs) and non-LDCs, multilateral trade liberalization have a negative and significant impact on economic exposure to shocks. Interestingly, LDCs appear to experience the highest magnitude of the reducing impact of multilateral trade liberalization on countries’ economic exposure to shocks. Research limitations/implications - These findings suggest that a greater cooperation among countries in the world, including among WTO members to further liberalize trade would surely contribute to reducing developing countries’ economic exposure to shocks. Practical implications - The current study shows that the current backlash against trade and the consequent strong appeal for domestic trade protectionist measures would likely to undermine the likelihood of further multilateral trade liberalization. One implication of this could be a rise in countries’ economic exposure to shocks. Originality/value - To the best of the author’s knowledge, this is first the study on this matter.

Suggested Citation

  • Sena Kimm Gnangnon, 2019. "Multilateral trade liberalization and developing countries’ economic exposure to shocks," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 46(2), pages 496-515, March.
  • Handle: RePEc:eme:jespps:jes-05-2017-0141
    DOI: 10.1108/JES-05-2017-0141
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    Citations

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    Cited by:

    1. Gnangnon, Sèna Kimm, 2021. "Effect of Multilateral Trade Liberalization on Services Export Diversification," EconStor Preprints 229152, ZBW - Leibniz Information Centre for Economics.
    2. Mehmet Huseyin Bilgin, 2019. "Trade Liberalization: Is It Desirable for All Developing Economies?: A Literature Review," Research in World Economy, Research in World Economy, Sciedu Press, vol. 10(3), pages 199-204, December.

    More about this item

    Keywords

    Developing countries; Economic exposure to shocks; Multilateral trade liberalization; F10; F14; O20;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O20 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - General

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