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Trade policies and growth in emerging economies: policy experiments

Author

Listed:
  • Seung Mo Choi

    (International Monetary Fund)

  • Hwagyun Kim

    (Texas A&M University)

  • Xiaohan Ma

    (Texas Tech University)

Abstract

This paper analyzes a dynamic endogenous growth model to quantify the channels through which international trade affects longer-term growth of an emerging economy, with an emphasis on the role played by trade policies. In the model, trade can promote (i) labor migration from agricultural to non-agricultural sectors and (ii) the inflow of foreign knowledge to enhance productivity in non-agricultural sector. The model is estimated to match with the data from selected advanced and emerging economies. Policy experiments suggest that openness to trade and elimination of trade barriers would raise annual real GDP growth by up to three percentage points for decades.

Suggested Citation

  • Seung Mo Choi & Hwagyun Kim & Xiaohan Ma, 2021. "Trade policies and growth in emerging economies: policy experiments," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 157(3), pages 603-629, August.
    • Handle: RePEc:spr:weltar:v:157:y:2021:i:3:d:10.1007_s10290-021-00413-6
    DOI: 10.1007/s10290-021-00413-6
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    More about this item

    Keywords

    Growth; Structural transformation; Learning by doing; Knowledge spillover; Trade policies;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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