False Prophet, or Genuine Savior? Assessing the Effects of Economic Openness on Sustainable Development, 1980–1999
AbstractWhile many herald globalization—the increasing interconnectedness of national economies—to be associated with rising standards of living across the globe, many others fear its effects on sustainability. Anti- globalization forces and environmentalists in particular view these developments as a threat to the welfare of future generations because of profligate and excessive current consumption. This study is the first to estimate the effects of dependence on trade, foreign direct investment (FDI), and an index of economic freedom on the World Bank’s measure of sustainability (the genuine savings rate), which measures the rate at which investment in the total stock of manufactured, human, and natural capital exceeds its depreciation. Contrary to pessimists’ fears, our indicators of economic openness show positive effects on sustainability, results that are robust to sample size, testing procedure, and several alternative specifications. The results support those who suggest that distorted economies tend to be both inefficient and damaging to future generations. If increasing trade, foreign direct investment, and economic freedom are hallmarks of globalization, then worries about its effects on future well-being are misplaced.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by EconWPA in its series International Trade with number 0409001.
Date of creation: 02 Sep 2004
Date of revision: 13 Oct 2004
Note: Type of Document - pdf
Contact details of provider:
Web page: http://18.104.22.168
Find related papers by JEL classification:
- F1 - International Economics - - Trade
- F2 - International Economics - - International Factor Movements and International Business
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-09-05 (All new papers)
- NEP-IFN-2004-09-05 (International Finance)
- NEP-REG-2004-09-05 (Regulation)
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.:
- Shafik, Nemat, 1994. "Economic Development and Environmental Quality: An Econometric Analysis," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 757-73, Supplemen.
- Garrett, Geoffrey, 1998. "Global Markets and National Politics: Collision Course or Virtuous Circle?," International Organization, Cambridge University Press, vol. 52(04), pages 787-824, September.
- Wacziarg, Romain & Welch, Karen Horn, 2003.
"Trade Liberalization and Growth: New Evidence,"
1826, Stanford University, Graduate School of Business.
- Norman Loayza & Klaus Schmidt-Hebbel & Luis Servén, 2000.
"What Drives Private Saving Across the World?,"
The Review of Economics and Statistics,
MIT Press, vol. 82(2), pages 165-181, May.
- Loayza, N. & Schmidt, K. & Serven, L., 1999. "What Drives Private Saving Across the World?," Papers 47, Cambridge - Risk, Information & Quantity Signals.
- Norman Loayza & Klaus Schmidt-Hebbel & Luis Servén, 1999. "What Drives Private Saving Across the World?," Working Papers Central Bank of Chile 47, Central Bank of Chile.
- Gylfason, Thorvaldur, 2001.
"Natural resources, education, and economic development,"
European Economic Review,
Elsevier, vol. 45(4-6), pages 847-859, May.
- Gylfason, Thorvaldur, 2000. "Natural Resources, Education, and Economic Development," CEPR Discussion Papers 2594, C.E.P.R. Discussion Papers.
- Klein, Michael & Aaron, Carl & Hadjimichael, Bita, 2001. "Foreign direct investment and poverty reduction," Policy Research Working Paper Series 2613, The World Bank.
- Milner, Helen V. & Kubota, Keiko, 2005. "Why the Move to Free Trade? Democracy and Trade Policy in the Developing Countries," International Organization, Cambridge University Press, vol. 59(01), pages 107-143, January.
- Srinivasan, T.N. & Bhagwati, J., 1999.
"Outward-Orientation and Development: Are Revisionist Right?,"
806, Yale - Economic Growth Center.
- T. N. Srinivasan & Jagdish Bhagwati, 1999. "Outward-Orientation and Development: Are Revisionists Right," Working Papers 806, Economic Growth Center, Yale University.
- Jeffrey A. Frankel & Andrew K. Rose, 1996.
"Currency crashes in emerging markets: an empirical treatment,"
International Finance Discussion Papers
534, Board of Governors of the Federal Reserve System (U.S.).
- Frankel, Jeffrey A. & Rose, Andrew K., 1996. "Currency crashes in emerging markets: An empirical treatment," Journal of International Economics, Elsevier, vol. 41(3-4), pages 351-366, November.
- World Bank, 2002. "World Development Indicators 2002," World Bank Publications, The World Bank, number 13921.
- Paul Collier & Jan Willem Gunning, 1998.
"Explaining African economic performance,"
Economics Series Working Papers
WPS/1997-02.2, University of Oxford, Department of Economics.
- Sachs, Jeffrey D. & Warner, Andrew M., 2001. "The curse of natural resources," European Economic Review, Elsevier, vol. 45(4-6), pages 827-838, May.
- Krueger, Anne O, 1998. "Why Trade Liberalisation Is Good for Growth," Economic Journal, Royal Economic Society, vol. 108(450), pages 1513-22, September.
- Jeffrey A. Frankel, 2003. "The Environment and Globalization," NBER Working Papers 10090, National Bureau of Economic Research, Inc.
- Alesina, Alberto & Spolaore, Enrico, 1997.
"On the Number and Size of Nations,"
The Quarterly Journal of Economics,
MIT Press, vol. 112(4), pages 1027-56, November.
- Greenaway, David & Morgan, Wyn & Wright, Peter W, 1998. "Trade Reform, Adjustment and Growth: What Does the Evidence Tell Us?," Economic Journal, Royal Economic Society, vol. 108(450), pages 1547-61, September.
- Ekins, Paul & Folke, Carl & Costanza, Robert, 1994. "Trade, environment and development: the issues in perspective," Ecological Economics, Elsevier, vol. 9(1), pages 1-12, January.
- Reinhart, Carmen & Ogaki, Masao & Ostry, Jonathan, 1996.
"Saving Behavior in Low- and Middle-Income Developing Countries: A Comparison,"
6978, University Library of Munich, Germany.
- Masao Ogaki & Jonathan D. Ostry & Carmen M. Reinhart, 1996. "Saving Behavior in Low- and Middle-Income Developing Countries: A Comparison," IMF Staff Papers, Palgrave Macmillan, vol. 43(1), pages 38-71, March.
- Masao Ogaki & Jonathan David Ostry & Carmen Reinhart, 1995. "Saving Behavior in Low- and Middle -Income Developing Countries: A Comparison," IMF Working Papers 95/3, International Monetary Fund.
- Cooper, Richard, 2001. "Growth and Inequality: The Role of Foreign Trade and Investment," Scholarly Articles 3677049, Harvard University Department of Economics.
- R[empty]pke, Inge, 1994. "Trade, development and sustainability -- a critical assessment of the "free trade dogma"," Ecological Economics, Elsevier, vol. 9(1), pages 13-22, January.
- Copeland,B.R. & Scott Taylor,M., 2003.
"Trade, growth and the environment,"
10, Wisconsin Madison - Social Systems.
- W. J. Henisz, 2000. "The Institutional Environment for Economic Growth," Economics and Politics, Wiley Blackwell, vol. 12(1), pages 1-31, 03.
- Grossman, Gene M & Krueger, Alan B, 1995.
"Economic Growth and the Environment,"
The Quarterly Journal of Economics,
MIT Press, vol. 110(2), pages 353-77, May.
- Hamilton, Kirk & Clemens, Michael, 1999. "Genuine Savings Rates in Developing Countries," World Bank Economic Review, World Bank Group, vol. 13(2), pages 333-56, May.
- Richard Perkins & Eric Neumayer, 2004. "The international diffusion of new technologies: a multi-technology analysis of latecomer advantage and global economic integration," Development and Comp Systems 0407001, EconWPA, revised 01 Jul 2004.
- Treisman, Daniel, 2000. "The causes of corruption: a cross-national study," Journal of Public Economics, Elsevier, vol. 76(3), pages 399-457, June.
- Gilbert,Christopher L. & Vines,David (ed.), 2000. "The World Bank," Cambridge Books, Cambridge University Press, number 9780521790956, November.
- Lopez, Ramon, 2003. "The Policy Roots of Socioeconomic Stagnation and Environmental Implosion: Latin America 1950-2000," World Development, Elsevier, vol. 31(2), pages 259-280, February.
- Eric Neumayer, 2000. "Resource Accounting in Measures of Unsustainability: Challenging the World Bank's Conclusions," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 15(3), pages 257-278, March.
- Rafael Di Tella & Alberto Ades, 1999. "Rents, Competition, and Corruption," American Economic Review, American Economic Association, vol. 89(4), pages 982-993, September.
- Neva R. Goodwin, . "03-07 "Five Kinds of Capital: Useful Concepts for Sustainable Development"," GDAE Working Papers 03-07, GDAE, Tufts University.
- Rami Abdelkafi & Hatem Derbel, 2008. "The effects of economic freedom components on economic growth: an analysis with a threshold model," EconomiX Working Papers 2008-3, University of Paris West - Nanterre la Défense, EconomiX.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (EconWPA).
If references are entirely missing, you can add them using this form.