Trade Policy and Economic Growth: A Skeptic's Guide to Cross-National Evidence
AbstractDo countries with lower policy-induced barriers to international trade grow faster, once other relevant country characteristics are controlled for? There exists a large empirical literature providing an affirmative answer to this question. We argue that methodological problems with the empirical strategies employed in this literature leave the results open to diverse interpretations. In many cases, the indicators of openness' used by researchers are poor measures of trade barriers or are highly correlated with other sources of bad economic performance. In other cases, the methods used to ascertain the link between trade policy and growth have serious shortcomings. Papers that we review include Dollar (1992), Ben-David (1993), Sachs and Warner (1995), and Edwards (1998). We find little evidence that open trade policies--in the sense of lower tariff and non-tariff barriers to trade--are significantly associated with economic growth.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7081.
Date of creation: Apr 1999
Date of revision:
Publication status: published as Bernanke, Ben and Kenneth S. Rogoff (eds.) NBER Macroeconomics Annual 2000, Volume 15. Cambrodge, MA: The MIT Press, 2001.
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Find related papers by JEL classification:
- O57 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
This paper has been announced in the following NEP Reports:
- NEP-AGR-1999-04-27 (Agricultural Economics)
- NEP-ALL-1999-04-27 (All new papers)
- NEP-CDM-1999-04-27 (Collective Decision-Making)
- NEP-DEV-1999-04-27 (Development)
- NEP-IND-1999-04-27 (Industrial Organization)
- NEP-PKE-1999-04-27 (Post Keynesian Economics)
- NEP-POL-1999-04-27 (Positive Political Economics)
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