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The empirics of trade and growth: where are the policy recommendations?

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  • Klaus Wälde

    ()

  • Christina Wood

Abstract

Existing literature repeatedly documented a strong correlation between trade and growth. It has also shown a causal effect of imports (though not necessarily exports) on growth in simultaneous equation models but to a lesser extent in Granger-causality tests. Export and import taxes have sometimes been found to negatively affect growth. Drawing policy conclusions from these general findings for a particular country is difficult not only because of the contradictory results but also because of potential second best world effects and the implied endogeneity of trade policy. Policy recommendations for a specific country require a careful analysis of market and institutional arrangements and can not be based on the existing cross-country literature. Copyright Springer-Verlag Berlin Heidelberg 2004

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Bibliographic Info

Article provided by Springer in its journal International Economics and Economic Policy.

Volume (Year): 1 (2004)
Issue (Month): 2 (January)
Pages: 275-292

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Handle: RePEc:kap:iecepo:v:1:y:2004:i:2:p:275-292

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Web page: http://www.springerlink.com/link.asp?id=111059

Related research

Keywords: Theoretical and Empirical Trade and Growth Studies; Policy Recommendations; F13 Commercial Policy; Protection; Promotion; Trade Negotiations; O1 Economic Development;

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Cited by:
  1. Guisan, M.C. & Exposito, P., 2006. "Production by sector in China, India and OECD Countries, 1985-2005," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 6(2).
  2. Grieben, Wolf-Heimo & Sener, Fuat, 2009. "Globalization, rent protection institutions, and going alone in freeing trade," European Economic Review, Elsevier, vol. 53(8), pages 1042-1065, November.
  3. Scott L. Baier & Jeffrey H. Bergstrand, 2004. "Trade agreements and trade flows: Estimating the effect of free trade agreements on trade flows with an application to the European Union," European Economy - Economic Papers 214, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
  4. M. Taner Yigit & Ali M. Kutan, 2004. "European Integration, Productivity Growth and Real Convergence," Departmental Working Papers 0402, Bilkent University, Department of Economics.
  5. Guisan, M.C. & Exposito, P., 2005. "Industry and Foreign Trade in India, China and OECD countries: an analysis of causality, 1960-2002," International Journal of Applied Econometrics and Quantitative Studies, Euro-American Association of Economic Development, vol. 2(3), pages 5-16.
  6. Wälde, Klaus, 2000. "Does trade cause growth? A policy perspective," Dresden Discussion Paper Series in Economics 10/00, Dresden University of Technology, Faculty of Business and Economics, Department of Economics.

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