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Regional Trade Agreements Versus Broad Liberalization: Which Path Leads to Faster Growth? Time-Series Evidence

Author

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  • Mr. Athanasios Vamvakidis

Abstract

Should a closed economy open its trade to all countries or limit itself to participation in regional trade agreements (RTAs)? Based on time-series evidence for a data set for 1950-92, this paper estimates and compares the growth performance of countries that liberalized broadly and those that joined an RTA. The comparisons show that economies grew faster after broad liberalization, both in the short and long run, but slower after participation in an RTA. Economies also had higher investment shares after broad liberalization, but lower ones after joining an RTA. The policy implications support broad liberalization.

Suggested Citation

  • Mr. Athanasios Vamvakidis, 1998. "Regional Trade Agreements Versus Broad Liberalization: Which Path Leads to Faster Growth? Time-Series Evidence," IMF Working Papers 1998/040, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:1998/040
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    Citations

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    Cited by:

    1. Fernando, Deepthi & Klapper, Leora & Sulla, Victor & Vittas, Dimitri, 2003. "The global growth of mutual funds," Policy Research Working Paper Series 3055, The World Bank.
    2. International Monetary Fund, 2007. "Republic of Mozambique: Selected Issues," IMF Staff Country Reports 2007/258, International Monetary Fund.
    3. Jože P. Damijan & Igor Masten, 2002. "Time Dependent Efficiency of Free Trade Agreements - The Case of Slovenia and the CEFTA Agreement," The Economic and Social Review, Economic and Social Studies, vol. 33(1), pages 147-160.
    4. Romain Wacziarg, 2001. "Measuring the Dynamic Gains from Trade," The World Bank Economic Review, World Bank, vol. 15(3), pages 393-39-429.
    5. Céline Kauffmann, 2000. "The interactive effect of trade and education on growth," Cahiers de la Maison des Sciences Economiques bla00022, Université Panthéon-Sorbonne (Paris 1).
    6. Klapper, Leora & Sulla, Victor & Vittas, Dimitri, 2004. "The development of mutual funds around the world," Emerging Markets Review, Elsevier, vol. 5(1), pages 1-38, March.
    7. Celine Kauffmann, 2000. "The interactive effect of trade and education on growth," Post-Print halshs-03721622, HAL.
    8. Scrieciu, Silviu S., 2004. "Assessing the Economic Impacts of Incorporating Romania's Agricultural and Food Sectors into EU's Customs Union: An Applied General Equilibrium Approach," Conference papers 331175, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    9. Feraboli, Omar, 2011. "Preferential vs. Full Trade Liberalisation: A Dynamic CGE Model with Heterogeneous Households for Jordan," Proceedings of the German Development Economics Conference, Berlin 2011 26, Verein für Socialpolitik, Research Committee Development Economics.
    10. FERABOLI Omar, 2010. "A Dynamic Analysis of Jordan’s Trade Liberalisation," EcoMod2003 330700052, EcoMod.
    11. Wacziarg, Romain, 2002. "India in the World Trading System," Research Papers 1760, Stanford University, Graduate School of Business.
    12. Mr. Jean-Jacques Hallaert, 2007. "Can Regional Integration Accelerate Development in Africa? CGE Model Simulations of the Impact of the SADC FTA on the Republic of Madagascar," IMF Working Papers 2007/066, International Monetary Fund.
    13. World Bank, 2005. "Colombia : Country Economic Memorandum, The Foundations for Competitiveness," World Bank Publications - Reports 8807, The World Bank Group.
    14. Romain Wacziarg, 2001. "Measuring the Dynamic Gains from Trade," The World Bank Economic Review, World Bank, vol. 15(3), pages 393-39-429.
    15. Omar Feraboli, 2012. "Preferential vs. Full Trade Liberalisation: A Dynamic CGE Model with Heterogeneous Households for Jordan," Working Paper series 08_12, Rimini Centre for Economic Analysis.
    16. Harrison, Ann E. & Rodriguez-Clare, Andres, 2009. "Trade, Foreign Investment, and Industrial Policy," MPRA Paper 15561, University Library of Munich, Germany.
    17. Omar FERABOLI, 2010. "A Dynamic Multisectoral Analysis of Jordan's Trade Liberalisation," EcoMod2004 330600050, EcoMod.
    18. Celine Kauffmann, 2000. "The interactive effect of trade and education on growth," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-03721622, HAL.
    19. International Monetary Fund, 2005. "Sri Lanka: Selected Issues and Statistical Appendix," IMF Staff Country Reports 2005/337, International Monetary Fund.
    20. Yongzheng Yang & Mr. Sanjeev Gupta, 2005. "Regional Trade Arrangements in Africa: Past Performance and the Way Forward," IMF Working Papers 2005/036, International Monetary Fund.

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