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Trade and Growth in East Asian Countries: Cause and Effect?

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Author Info
Jeffrey A. Frankel
David Romer
Teresa Cyrus

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Abstract

Estimates of growth equations have found a role for openness, particularly in explaining rapid growth among East Asian countries. But major concerns of simultaneous causality between growth and trade have been expressed. This study aims to deal with the endogeneity of trade by using as instrumental variables the exogenous determinants from the gravity model of bilateral trade, such as proximity to trading partners. We find that the effect of openness on growth is even stronger when we correct for the endogeneity of openness than in standard OLS estimates. We conclude with estimates of how much has been contributed to East Asian growth both by the exogenous or geographical component of openness and by the residual or policy component.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5732.

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Date of creation: Aug 1996
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Publication status: published as NICs After the Asian Miracle, Singer, H., N. Hatti, and R. Tandon, eds., India: BR Publishing, 2000.
Handle: RePEc:nbr:nberwo:5732

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Tran Van Hoa, 2004. "Australia-Thailand Free Trade Agreement: Challenges and Opportunities for Bilateral Trade Policy and Closer Economic Relations," Economics Working Papers wp04-12, School of Economics, University of Wollongong, NSW, Australia. [Downloadable!]
  2. WenShwo Fang & YiHao Lai & Stephen M. Miller, 2005. "Does Exchange Rate Risk Affect Exports Asymmetrically? Asian Evidence," Working papers 2005-09, University of Connecticut, Department of Economics. [Downloadable!]
  3. Goh, Ai-Ting & Olivier, Jacques, 2001. "Learning by Doing, Trade in Capital Goods and Growth," Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) Discussion Paper 2001002, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES). [Downloadable!]
  4. Klaus, WAELDE & Christina, WOOD, 2004. "The Empirics of Trade and Growth : Where are the Policy Recommendations ?," Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) Discussion Paper 2004013, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES). [Downloadable!]
    Other versions:
  5. David-Pascal Dion, 2004. "Regional integration and economic development: An empirical approach," Discussion Papers 21, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich. [Downloadable!]
  6. Matthias Cinyabuguma & Louis Putterman, 2006. "Sub-Saharan Growth Surprises: Geography, Institutions And History in an all African Data Panel," Working Papers 2006-21, Brown University, Department of Economics. [Downloadable!]
  7. Hildegunn Ekroll Stokke & Jørn Rattsø & Xinshen Diao, 2001. "Learning by Exporting and Productivity-investment Interaction: An Intertemporal General Equilibrium Analysis of the Growth Process in Thailand," Working Paper Series 2302, Department of Economics, Norwegian University of Science and Technology. [Downloadable!]
    Other versions:
  8. Sweta C. Saxena, 2005. "Are Optimal Currency Areas Optimal for All? A Reassessment of the Case for Asian Monetary Union," International Finance 0508003, EconWPA. [Downloadable!]
  9. Ai Ting Goh & Jacques Olivier, 2000. "Learning by Doing, Trade in Capital Goods and Growth," Econometric Society World Congress 2000 Contributed Papers 0854, Econometric Society. [Downloadable!]
  10. Tran Van Hoa, 2003. "New Asian Regionalism: Evidence of ASEAN+3 Free Trade Agreement From Extended Gravity Theory and New Modelling Approach," Economics Working Papers wp03-03, School of Economics, University of Wollongong, NSW, Australia. [Downloadable!]
  11. Diaz-Bautista, Alejandro, 2002. "The role of telecommunications infrastructure and human capital: Mexico´s economic growth and convergence," ERSA conference papers ersa02p102, European Regional Science Association. [Downloadable!]
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  13. Chan-Hyun Sohn & Jinna Yoon, 2001. "Does the Gravity Model Fit Korea’s Trade Patterns? Implications for Korea’s FTA Policy and North-South Korean Trade," Trade Working Papers 362, East Asian Bureau of Economic Research. [Downloadable!]
  14. BOUCEKKINE, Raouf & RUIZ-TAMARIT Ramon, 2001. "Capital Maintenance and Investment : Complements or Substitutes ?," Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) Discussion Paper 2001012, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES). [Downloadable!]
  15. Robert Z. Lawrence & David E. Weinstein, 1999. "Trade and Growth: Import-Led or Export-Led? Evidence From Japan and Korea," NBER Working Papers 7264, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  16. Anita Labériotte, 2002. "La viabilité de l'Association des Nations d'Asie du Sud-Est au regard de l'analyse des échanges intra-zone," Documents de travail 68, Centre d'Economie du Développement de l'Université Montesquieu Bordeaux IV. [Downloadable!]
  17. William Easterly & Ross Levine, 2002. "Tropics, Germs, and Crops: How Endowments Influence Economic Development," NBER Working Papers 9106, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
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