Trade, catching-up and divergence
AbstractThis paper investigates the link between trade and convergence in per capita income by applying a threshold methodology to standard growth regressions in order to capture a nonlinear effect of trade on growth. We use 10 trade measures, divided into trade intensity ratios and measure of trade restrictions. For the former group of indicators only, our tests show that linear models have to be rejected in favour of threshold regressions. We have identified three different regimes, characterized by different relationships between growth and its determinants. Countries belonging to the regimes grouping higher-income economies and poorer countries are diverging. The conditional convergence hypothesis is only accepted in the regime of middle-income countries; a process of catching-up can be mainly found in the case of few developing countries. For the vast majority of developing countries, divergence in per capita income seems to be the norm. The correlation between measures of trade restrictions and growth is different across regimes, and the positive effect of a decrease in tariffs on growth depends on the level of development; for the majority of the developing countries included in our sample a decrease in tariffs will have no effect on growth.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal International Review of Applied Economics.
Volume (Year): 23 (2009)
Issue (Month): 3 ()
Contact details of provider:
Web page: http://www.tandfonline.com/CIRA20
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty).
If references are entirely missing, you can add them using this form.