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Trade policy and productivity

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  • Badinger, Harald

Abstract

Previous studies on the determinants of productivity emphasized the role of trade and institutions but omitted trade policy due to endogeneity concerns. This paper considers the role of one important element of trade policy: free trade agreements (FTAs). Based on recent work on the determinants of FTAs, we suggest an instrument which is based on the propensity to enter an FTA due to (exogenous) geographical characteristics. We find that differences in institutional quality and trade, due to variations in geography and trade policy, have a sizeable effect on productivity and can explain the huge variation in per capita income across countries.

Suggested Citation

  • Badinger, Harald, 2008. "Trade policy and productivity," European Economic Review, Elsevier, vol. 52(5), pages 867-891, July.
  • Handle: RePEc:eee:eecrev:v:52:y:2008:i:5:p:867-891
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    References listed on IDEAS

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    Cited by:

    1. Nicholas Apergis, 2015. "Labor Income Tax and Output in a Panel of Central and Eastern European Countries: A Long-Run Perspective," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 21(1), pages 1-12, March.
    2. repec:ucp:jpolec:doi:10.1086/692695 is not listed on IDEAS
    3. Martínez-Zarzoso, Inmaculada & Oueslati, Walid, 2016. "Are deep and comprehensive regional trade agreements helping to reduce air pollution?," Center for European, Governance and Economic Development Research Discussion Papers 292, University of Goettingen, Department of Economics.
    4. Robert C. Feenstra & David E. Weinstein, 2017. "Globalization, Markups, and US Welfare," Journal of Political Economy, University of Chicago Press, vol. 125(4), pages 1040-1074.
    5. repec:spr:ieaple:v:18:y:2018:i:6:d:10.1007_s10784-018-9414-0 is not listed on IDEAS
    6. Baghdadi, Leila & Martinez-Zarzoso, Inmaculada & Zitouna, Habib, 2013. "Are RTA agreements with environmental provisions reducing emissions?," Journal of International Economics, Elsevier, vol. 90(2), pages 378-390.
    7. Scott L Baier & Jeffrey H Bergstrand & Matthew W Clance, 2017. "Heterogeneous economic integration agreements' effects, gravity, and welfare," Discussion Papers 2017-05, University of Nottingham, GEP.
    8. repec:kap:iaecre:v:21:y:2015:i:1:p:1-12 is not listed on IDEAS
    9. repec:eee:deveco:v:135:y:2018:i:c:p:587-608 is not listed on IDEAS
    10. Gianluca Salsecci & Antonio Pesce, 2008. "Long-term Growth Perspectives and Economic Convergence of CEE and SEE Countries," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 15(2), pages 225-239, September.
    11. Miron, Dumitru & Dima, Alina & Paun, Cristian, 2009. "A model for assessing Romania's real convergence based on distances and clusters methods," MPRA Paper 31410, University Library of Munich, Germany.

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