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Growth and Structural Reforms

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Author Info

  • Lone Engbo Christiansen
  • Thierry Tressel
  • Martin Schindler

Abstract

This paper presents a simultaneous assessment of the relationship between economic performance and three groups of economic reforms: domestic finance, trade, and the capital account. Among these, domestic financial reforms, and trade reforms, are robustly associated with economic growth, but only in middle-income countries. In contrast, we do not find any systematic positive relationship between capital account liberalization and economic growth. Moreover, the effect of domestic financial reforms on economic growth in middle-income countries is explained by improvements in measured aggregate TFP growth, not by higher aggregate investment. We present evidence that variation in the quality of property rights helps explain the heterogeneity of the effectiveness of financial and trade reforms in developing countries. The evidence suggests that sufficiently developed property rights are a precondition for reaping the benefits of economic reform. Our results are robust to endogeneity bias and a number of alternative specifications.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 09/284.

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Length: 52
Date of creation: 01 Dec 2009
Date of revision:
Handle: RePEc:imf:imfwpa:09/284

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Related research

Keywords: Economic growth; Economic models; Economic reforms; Governance; real gdp; trade reforms; gdp per capita; domestic finance; trade reform; gdp growth; trade liberalization; transition countries; average tariff; dynamic effects; economic liberalization; tariff rates; growth accounting; total factor productivity; international trade; economic outcomes; average tariff rates; capital formation; market liberalization; liberalization indices; gross capital formation; measure of trade; growth rates; trade openness; trade regimes; political economy; border trade; transition economies; reducing trade barriers; global integration; full liberalization; growth rate; gdp growth rates; liberalization efforts; trade barriers; trade restrictions; weighted tariff; nontariff barriers; output growth;

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References

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Citations

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Cited by:
  1. Eleftherios Goulas & Athina Zervoyianni, 2013. "Economic growth and crime: does uncertainty matter?," Applied Economics Letters, Taylor & Francis Journals, vol. 20(5), pages 420-427, March.
  2. Christiansen, Lone & Schindler, Martin & Tressel, Thierry, 2013. "Growth and structural reforms: A new assessment," Journal of International Economics, Elsevier, vol. 89(2), pages 347-356.
  3. Fabrizio Coricelli & Mathilde Maurel, 2010. "Growth and crisis in transition : a comparative perspective," Documents de travail du Centre d'Economie de la Sorbonne 10020, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
  4. Romain Bouis & Romain Duval & Fabrice Murtin, 2011. "The Policy and Institutional Drivers of Economic Growth Across OECD and Non-OECD Economies: New Evidence from Growth Regressions," OECD Economics Department Working Papers 843, OECD Publishing.
  5. Pablo Gluzmann & Martín Guzman, 2011. "Financial Reforms and Financial Instability," Ensayos Económicos, Central Bank of Argentina, Economic Research Department, vol. 1(61-62), pages 35-73, January -.
  6. Eleftherios Goulas & Athina Zervoyianni, 2012. "Growth, Deficits and Uncertainty in a Panel of 28 Countries," Working Paper Series 52_12, The Rimini Centre for Economic Analysis.
  7. Kalyvitis, Sarantis & Vlachaki, Irene, 2012. "When does more aid imply less democracy? An empirical examination," European Journal of Political Economy, Elsevier, vol. 28(1), pages 132-146.
  8. repec:hal:journl:halshs-00469327 is not listed on IDEAS
  9. Anis Chowdhury, 2012. "Structural Adjustment and Crises –Which Way Now?," Institutions and Economies (formerly known as International Journal of Institutions and Economies), Faculty of Economics and Administration, University of Malaya, vol. 4(1), pages 85-118, April.

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