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The trade-growth nexus in the developing countries: a quantile regression approach

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  • Gilles Dufrenot

    ()

  • Valerie Mignon

    ()

  • Charalambos Tsangarides

    ()

Abstract

This paper applies quantile regression techniques to investigate how the impact of trade openness on the growth rate of per capita income varies with the conditional distribution of growth. Using formal robustness analyses, we first identify robust variables affecting economic growth (investment, government balance, terms of trade, inflation, and population growth) which we then use as controls in the quantile regression estimations. Our findings suggest a heterogeneous trade-growth nexus: for both the long-run and the short-run, the effect of openness on growth is higher in countries with low growth rates compared to those of high growth rates. Our results cast doubt on earlier literature that finds little effect of openness on growth, and suggest that the implications of parameter heterogeneity in the openness-growth relationship need to be considered before prescribing policies.

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Bibliographic Info

Article provided by Springer in its journal Review of World Economics.

Volume (Year): 146 (2010)
Issue (Month): 4 (December)
Pages: 731-761

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Handle: RePEc:spr:weltar:v:146:y:2010:i:4:p:731-761

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Related research

Keywords: Quantile regression; Trade-growth nexus; Developing countries; C23; F13; 011;

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Citations

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Cited by:
  1. Moelders, Florian, 2011. "Trade Persistence and the Limits of Trade Agreements," Proceedings of the German Development Economics Conference, Berlin 2011 58, Verein für Socialpolitik, Research Committee Development Economics.
  2. Sophie Béreau & Antonia Lopez Villavicencio & Valérie Mignon, 2009. "Currency Misalignments and Growth: a New Look Using Nonlinear Panel Data Methods," Working Papers 2009-17, CEPII research center.
  3. Jinzhao Chen, 2012. "Real Exchange Rate and Economic Growth: Evidence from Chinese Provincial Data (1992 - 2008)," Working Papers halshs-00667467, HAL.
  4. Lee, Jim, 2011. "Export specialization and economic growth around the world," Economic Systems, Elsevier, vol. 35(1), pages 45-63, March.
  5. Muhammad, Shahbaz, 2012. "Does Trade Openness Affect Long Run Growth? Cointegration, Causality and Forecast Error Variance Decomposition Tests for Pakistan," MPRA Paper 37391, University Library of Munich, Germany, revised 10 Mar 2012.
  6. Marta Simões & João Sousa Andrade & Adelaide Duarte, 2012. "Convergence and Growth: Portugal in the EU 1986-2010," GEMF Working Papers 2012-13, GEMF - Faculdade de Economia, Universidade de Coimbra.
  7. Jinzhao Chen, 2012. "Real Exchange Rate and Economic Growth: Evidence from Chinese Provincial Data (1992 - 2008)," PSE Working Papers halshs-00667467, HAL.

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