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Trade Openness, Structural Change and Total Factor Productivity

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Listed author(s):
  • Sohrab Abizadeh
  • Manish Pandey

Abstract

The impact of trade openness on growth of total factor productivity (TFP) is investigated. Given the differences in tradability of goods across sectors as well as the ongoing structural change, we examine whether trade openness has had a differential impact on TFP growth of the three main sectors of an economy. While the positive impact of openness on TFP growth for the aggregate economy is confirmed, openness has had no appreciable impact on the growth of TFP in the agricultural and industrial sectors. We find that the positive effect of openness on TFP growth for the economy as a whole was mostly due to the positive relationship between the two variables for the services sector. Further, we conclude that the lack of a general consensus in past studies could be due to their neglect of structural change and temporal factors when analyzing the trade-TFP nexus.

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File URL: http://www.tandfonline.com/doi/abs/10.1080/10168730903372273
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Article provided by Taylor & Francis Journals in its journal International Economic Journal.

Volume (Year): 23 (2009)
Issue (Month): 4 ()
Pages: 545-559

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Handle: RePEc:taf:intecj:v:23:y:2009:i:4:p:545-559
DOI: 10.1080/10168730903372273
Contact details of provider: Web page: http://www.tandfonline.com/RIEJ20

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Keywords: Trade; openness; sectors; total factor productivity;

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Cited by:

  1. Brinca, Pedro, 2014. "Distortions in the neoclassical growth model: A cross-country analysis," Journal of Economic Dynamics and Control, Elsevier, vol. 47(C), pages 1-19.
  2. Walker, Sarah, 2012. "The (Rail)road to Structural Change: Transportation Costs, Integration, and Production Specialization," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124614, Agricultural and Applied Economics Association.

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