Is International Openness associated with faster economic growth?

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Is International Openness associated with faster economic growth?

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James Proudman
Stephen Redding
Marco Bianchi

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Stephen James Redding

Abstract

This paper considers the role of international openness in facilitating the convergence of average income per capita between countries. The statistical technique of Discriminant Analysis is used to sort economies into groups of open and closed on the basis of a number of measures of the stance of international trade policy. The evolution of the cross-section distribution of average income per capita across countries is modelled both for the whole world, and then for the groups of open and closed economies separately. Open economies are found to exhibit substantially different income dynamics and to converge to higher levels of income compared to their closed counterparts. These differences remain even after making allowance for differences in countries' relative levels of investment.

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Paper provided by Bank of England in its series Bank of England working papers with number 63.

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Handle: RePEc:boe:boeewp:63

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Gavin Cameron & James Proudman & Stephen Redding, . "Openness and its association with productivity growth in UK manufacturing industry," Bank of England working papers 104, Bank of England. [Downloadable!]

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