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Trade Liberalization, Economic Crises, and Growth

  • Falvey, Rod
  • Foster, Neil
  • Greenaway, David

Many economic reforms are undertaken during an economic crisis, but is a crisis a good time to undertake trade reform? We investigate whether an economic crisis at the time of trade liberalization affects a country’s subsequent growth performance. We employ threshold regression techniques on five crisis indicators to identify the “crisis values” and to estimate the differential growth effects in the crisis and non-crisis regimes. Although trade liberalization in both crisis and non-crisis periods raises subsequent growth, we find that an internal crisis implies a lower acceleration and an external crisis a higher acceleration relative to the non-crisis regime.

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Article provided by Elsevier in its journal World Development.

Volume (Year): 40 (2012)
Issue (Month): 11 ()
Pages: 2177-2193

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Handle: RePEc:eee:wdevel:v:40:y:2012:i:11:p:2177-2193
Contact details of provider: Web page: http://www.elsevier.com/locate/worlddev

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