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The Trade-Growth Nexus in the Developing Countries: a Quantile Regression Approach

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  • Gilles Dufrénot
  • Valérie 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

Paper provided by CEPII research center in its series Working Papers with number 2009-04.

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Date of creation: Mar 2009
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Handle: RePEc:cii:cepidt:2009-04

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Keywords: Quantile regression; Growth-trade nexus; Developing countries;

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References

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Citations

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Cited by:
  1. Blaise Gnimassoun, 2014. "The importance of the exchange rate regime in limiting current account imbalances in sub-Saharan African countries," EconomiX Working Papers 2014-22, University of Paris West - Nanterre la Défense, EconomiX.
  2. Coulibaly, Issiaka & Gnimassoun, Blaise, 2013. "Optimality of a monetary union: New evidence from exchange rate misalignments in West Africa," Economic Modelling, Elsevier, vol. 32(C), pages 463-482.
  3. 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.
  4. Lee, Jim, 2011. "Export specialization and economic growth around the world," Economic Systems, Elsevier, vol. 35(1), pages 45-63, March.
  5. Damette, Olivier & Delacote, Philippe, 2012. "On the economic factors of deforestation: What can we learn from quantile analysis?," Economic Modelling, Elsevier, vol. 29(6), pages 2427-2434.
  6. Jinzhao Chen, 2012. "Real Exchange Rate and Economic Growth: Evidence from Chinese Provincial Data (1992 - 2008)," PSE Working Papers halshs-00667467, HAL.
  7. 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.
  8. Shahbaz, Muhammad, 2012. "Does trade openness affect long run growth? Cointegration, causality and forecast error variance decomposition tests for Pakistan," Economic Modelling, Elsevier, vol. 29(6), pages 2325-2339.
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  10. Helble, Matthias & Mann, Catherine & Wilson, John S., 2009. "Aid for trade facilitation," Policy Research Working Paper Series 5064, The World Bank.
  11. Sophie Béreau & Antonia L�pez Villavicencio & Valérie Mignon, 2012. "Currency misalignments and growth: a new look using nonlinear panel data methods," Applied Economics, Taylor & Francis Journals, vol. 44(27), pages 3503-3511, September.
  12. Fabrício Missio & Frederico Jayme Jr & Gustavo Britto & José Luis Oreiro, 2013. "Real Exchange Rate and Economic Growth: new empirical evidence," Textos para Discussão Cedeplar-UFMG 482, Cedeplar, Universidade Federal de Minas Gerais.

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