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Regional Trade Agreements or Broad Liberalization: Which Path Leads to Faster Growth?

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  • Athanasios Vamvakidis

    (International Monetary Fund)

Abstract

Should a closed economy open its trade to all countries or limit itself to participation in regional trade agreements (RTAs)? Based on time-series evidence for a data set for 1950-92, this paper estimates and compares the growth performance of countries that liberalized broadly and that of those that joined an RTA. The comparisons show that economies grew faster after broad liberalization, in both the short and the long run, but slower after participation in an RTA. Economies also had higher investment shares after broad liberalization, but lower ones after joining an RTA. The policy implications support broad liberalization. Copyright 1999, International Monetary Fund

Suggested Citation

  • Athanasios Vamvakidis, 1999. "Regional Trade Agreements or Broad Liberalization: Which Path Leads to Faster Growth?," IMF Staff Papers, Palgrave Macmillan, vol. 46(1), pages 1-3.
  • Handle: RePEc:pal:imfstp:v:46:y:1999:i:1:p:3
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    Cited by:

    1. Innwon Park & Soonchan Park, 2008. "Reform Creating Regional Trade Agreements And Foreign Direct Investment: Applications For East Asia," Pacific Economic Review, Wiley Blackwell, vol. 13(5), pages 550-566, December.
    2. Beckmann, Rainer & Hebler, Martin & Kösters, Wim & Neimke, Markus, 2000. "Theoretische Konzepte zum Europäischen Integrationsprozeß: Ein aktueller Überblick
      [Theoretical concepts for the process of European integration: A current overview]
      ," MPRA Paper 35703, University Library of Munich, Germany.
    3. Matías Berthelon, 2004. "Growth Effects of Regional Integration Agreements," Working Papers Central Bank of Chile 278, Central Bank of Chile.
    4. Eriṣ, Mehmet N. & Ulaṣan, Bülent, 2013. "Trade openness and economic growth: Bayesian model averaging estimate of cross-country growth regressions," Economic Modelling, Elsevier, vol. 33(C), pages 867-883.
    5. Kenneth Chan & Vinh Dang, 2010. "Multilateral trade and export-led growth in the world economy: some post-war evidence," Empirical Economics, Springer, vol. 38(3), pages 689-703, June.
    6. Kangni Kpodar & Patrick Imam, 2016. "Does a Regional Trade Agreement Lessen or Worsen Growth Volatility? An Empirical Investigation," Review of International Economics, Wiley Blackwell, vol. 24(5), pages 949-979, November.
    7. Brodzicki Tomasz, 2003. "In search for accumulative effects of European economic integration," International Trade 0310006, EconWPA.
    8. Jacob W. Musila & Simon P. Sigué, 2006. "Accelerating foreign direct investment flow to Africa: from policy statements to successful strategies," Managerial Finance, Emerald Group Publishing, vol. 32(7), pages 577-593.
    9. Teweldemedhin, M.Y. & van Schalkwyk, Herman D., 2010. "The impact of trade liberalisation on South African agricultural productivity," 2010 AAAE Third Conference/AEASA 48th Conference, September 19-23, 2010, Cape Town, South Africa 95963, African Association of Agricultural Economists (AAAE);Agricultural Economics Association of South Africa (AEASA).
    10. Jad Chaaban & Alban Thomas, 2008. "A Structural Model for Evaluating the Sector-specific Impacts of Preferential Trade Agreements," Journal of Industry, Competition and Trade, Springer, vol. 8(1), pages 73-88, March.
    11. Anupam Das & Biru Paksha Paul, 2011. "Openness and growth in emerging Asian economies: Evidence from GMM estimations of a dynamic panel," Economics Bulletin, AccessEcon, vol. 31(3), pages 2219-2228.
    12. José Antonio Alonso & Carlos Garcimartín, 2005. "Apertura Comercial y Estrategia de Desarrollo," Policy Papers del Instituto Complutense de Estudios Internacionales 05-02, Universidad Complutense de Madrid, Instituto Complutense de Estudios Internacionales.
    13. Dodzin, Sergei & Vamvakidis, Athanasios, 2004. "Trade and industrialization in developing economies," Journal of Development Economics, Elsevier, vol. 75(1), pages 319-328, October.
    14. Olivier Peron & Serge Rey, 2012. "Trade and convergence of per capita income in the Indian Ocean Zone, 1950–2008," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 49(3), pages 657-683, December.
    15. Alan V. Deardorff & Robert M. Stern, 2002. "EU Expansion and EU Growth," Working Papers 487, Research Seminar in International Economics, University of Michigan.
    16. Kangni R Kpodar & Patrick A. Imam, 2015. "Does A Regional Trade Agreement Lessen or Exacerbate Growth Volatility? An Empirical Investigation," IMF Working Papers 15/177, International Monetary Fund.
    17. Ulaşan, Bülent, 2012. "Openness to international trade and economic growth: A cross-country empirical investigation," Economics Discussion Papers 2012-25, Kiel Institute for the World Economy (IfW).
    18. Stiglitz, Joseph E., 2000. "Capital Market Liberalization, Economic Growth, and Instability," World Development, Elsevier, vol. 28(6), pages 1075-1086, June.
    19. Tomasz Brodzicki, 2005. "New empirical insights into the growth effects of economic integration within EU," International Trade 0505014, EconWPA.
    20. Baharumshah, Ahmad Zubaidi & Onwuka, Kevin Odulukwe & Habibullah, Muzafar Shah, 2007. "Is a regional trade bloc a prelude to multilateral trade liberalization?: Empirical evidence from the ASEAN-5 economies," Journal of Asian Economics, Elsevier, vol. 18(2), pages 384-402, April.
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      ," MPRA Paper 30206, University Library of Munich, Germany.

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    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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