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The empirics of trade and growth: where are the policy recommendations?

  • Klaus Wälde

    ()

  • Christina Wood

Existing literature repeatedly documented a strong correlation between trade and growth. It has also shown a causal effect of imports (though not necessarily exports) on growth in simultaneous equation models but to a lesser extent in Granger-causality tests. Export and import taxes have sometimes been found to negatively affect growth. Drawing policy conclusions from these general findings for a particular country is difficult not only because of the contradictory results but also because of potential second best world effects and the implied endogeneity of trade policy. Policy recommendations for a specific country require a careful analysis of market and institutional arrangements and can not be based on the existing cross-country literature. Copyright Springer-Verlag Berlin Heidelberg 2004

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Article provided by Springer in its journal International Economics and Economic Policy.

Volume (Year): 1 (2004)
Issue (Month): 2 (January)
Pages: 275-292

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Handle: RePEc:kap:iecepo:v:1:y:2004:i:2:p:275-292
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