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Openness and growth: what have we learned?

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  • Francisco Rodriguez

Abstract

This paper discusses recent evidence regarding the existence of a cross-country empirical relationship between openness to international trade and economic growth. I discuss the empirical contributions of Warner (2003), Dollar and Kraay (2002), and Wacziarg and Welch (2003), and argue that these studies fail to convincingly establish a positive link between trade and growth. I also discuss the 1990-03 experience and show that growth does not display a significant correlation with any measure of trade openness over this period.

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File URL: http://www.un.org/esa/desa/papers/2007/wp51_2007.pdf
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Bibliographic Info

Paper provided by United Nations, Department of Economics and Social Affairs in its series Working Papers with number 51.

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Length: 25 pages
Date of creation: Aug 2007
Date of revision:
Handle: RePEc:une:wpaper:51

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Keywords: economic growth; openness; trade policy. cross-country growth regressions;

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  1. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
  2. Gernot Doppelhofer & Ronald I. Miller & Xavier Sala-i-Martin, 2000. "Determinants of Long-Term Growth: A Bayesian Averaging of Classical Estimates (BACE) Approach," NBER Working Papers 7750, National Bureau of Economic Research, Inc.
  3. Francisco Rodriguez & Dani Rodrik, 1999. "Trade Policy and Economic Growth: A Skeptic's Guide to Cross-National Evidence," NBER Working Papers 7081, National Bureau of Economic Research, Inc.
  4. Harrison, Ann & Hanson, Gordon, 1999. "Who gains from trade reform? Some remaining puzzles," Journal of Development Economics, Elsevier, vol. 59(1), pages 125-154, June.
  5. Krueger, Anne O, 1997. "Trade Policy and Economic Development: How We Learn," American Economic Review, American Economic Association, vol. 87(1), pages 1-22, March.
  6. Roberto Rigobon, 2003. "Identification Through Heteroskedasticity," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 777-792, November.
  7. Wacziarg, Romain & Welch, Karen Horn, 2003. "Trade Liberalization and Growth: New Evidence," Research Papers 1826, Stanford University, Graduate School of Business.
  8. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.
  9. Jeffrey Sachs & Andrew Warner, 1995. "Economic Reform and the Progress of Global Integration," Harvard Institute of Economic Research Working Papers 1733, Harvard - Institute of Economic Research.
  10. Rodrik, Dani & Subramanian, Arvind & Trebbi, Francesco, 2002. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development," CEPR Discussion Papers 3643, C.E.P.R. Discussion Papers.
  11. Ben-David, Dan, 1993. "Equalizing Exchange: Trade Liberalization and Income Convergence," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 653-79, August.
  12. Jong-Wha Lee, 1993. "International Trade, Distortions, and Long-Run Economic Growth," IMF Staff Papers, Palgrave Macmillan, vol. 40(2), pages 299-328, June.
  13. Roberto Chang & Linda Kaltani & Norman Loayza, 2005. "Openness can be good for Growth: The Role of Policy Complementarities," DEGIT Conference Papers c010_021, DEGIT, Dynamics, Economic Growth, and International Trade.
  14. Sebastian Edwards, 1997. "Openness, Productivity and Growth: What Do We Really Know?," NBER Working Papers 5978, National Bureau of Economic Research, Inc.
  15. Dollar, David & Kraay, Aart, 2001. "Trade, growth, and poverty," Policy Research Working Paper Series 2615, The World Bank.
  16. David H. Romer & Jeffrey A. Frankel, 1999. "Does Trade Cause Growth?," American Economic Review, American Economic Association, vol. 89(3), pages 379-399, June.
  17. Stanley L Engerman & Kenneth L. Sokoloff, 2002. "Factor Endowments, Inequality, and Paths of Development Among New World Economics," NBER Working Papers 9259, National Bureau of Economic Research, Inc.
  18. Jagdish Bhagwati, 2002. "Trade and Poverty in the Poor Countries," American Economic Review, American Economic Association, vol. 92(2), pages 180-183, May.
  19. repec:rus:hseeco:70719 is not listed on IDEAS
  20. Rigobon, Roberto & Rodrik, Dani, 2004. "Rule of Law, Democracy, Openness and Income: Estimating the Interrelationships," CEPR Discussion Papers 4653, C.E.P.R. Discussion Papers.
  21. Jeffrey D. Sachs, 2003. "Institutions Don't Rule: Direct Effects of Geography on Per Capita Income," NBER Working Papers 9490, National Bureau of Economic Research, Inc.
  22. repec:umd:umdeco:rodriguez9901 is not listed on IDEAS
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Citations

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Cited by:
  1. Claudia Buch & Paola Monti, 2010. "Openness and income disparities: does trade explain the “Mezzogiorno effect”?," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 145(4), pages 667-688, January.
  2. Dürnecker, Georg & Meyer, Moritz & Vega-Redondo, Fernando, 2014. "The Network Origins of Economic Growth," Working Papers 14-06, University of Mannheim, Department of Economics.
  3. Frensch, Richard & Gaucaite Wittich, Vitalija, 2009. "Product variety and technical change," Journal of Development Economics, Elsevier, vol. 88(2), pages 242-257, March.
  4. Vladimir Popov, 2010. "Development theories and development experience: half a century journey," Working Papers w0153, Center for Economic and Financial Research (CEFIR).
  5. Estevadeordal, Antoni & Taylor, Alan M, 2008. "Is the Washington Consensus Dead? Growth, Openness, and the Great Liberalization, 1970s-2000s," CEPR Discussion Papers 6942, C.E.P.R. Discussion Papers.
  6. Rob Vos, 2007. "What we do and don’t know about trade liberalization and poverty reduction," Working Papers 50, United Nations, Department of Economics and Social Affairs.
  7. Weshah Razzak, 2007. "Explaining the gaps in labour productivity in some developed countries," Money Macro and Finance (MMF) Research Group Conference 2006 30, Money Macro and Finance Research Group.
  8. Astorga, Pablo, 2010. "A century of economic growth in Latin America," Journal of Development Economics, Elsevier, vol. 92(2), pages 232-243, July.
  9. Razzak, Weshah, 2006. "Explaining the gaps in labour productivity for some developed countries," MPRA Paper 53, University Library of Munich, Germany.
  10. Buch, Claudia M. & Toubal, Farid, 2009. "Openness and growth: The long shadow of the Berlin Wall," Journal of Macroeconomics, Elsevier, vol. 31(3), pages 409-422, September.

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