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Trade, Remittances, Institutions, and Economic Growth

This paper empirically investigates the role of trade, remittances, and institutions in economic development in a large sample of developing countries using recently developed instruments for all these variables. Both cross-country (over 30 years) and dynamic panel data (over 5-year periods) regressions of growth rates on instrumented trade, remittances, and institutions provide evidence of a significant impact of trade, institutions, and remittances on growth. While institutions foster growth, remittances hamper it. The effect of trade on growth is positive in cross-sectional regressions but ambiguous in dynamic panel data regressions. These results are indicative of a more important role for trade in explaining growth in the very long run compared with over shorter horizons.

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File URL: http://www.tandfonline.com/doi/abs/10.1080/10168730903119443
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Article provided by Taylor & Francis Journals in its journal International Economic Journal.

Volume (Year): 23 (2009)
Issue (Month): 3 ()
Pages: 391-408

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Handle: RePEc:taf:intecj:v:23:y:2009:i:3:p:391-408
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