IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

Does trade composition influence economic growth? Time series evidence for 28 OECD and developing countries

  • Joshua Lewer
  • Hendrik Van den Berg

This paper is an empirical test of the hypothesis suggested by Mazumdar (1996), namely, that the composition of trade determines the strength of the 'engine of growth'. Mazumdar suggested that, within the framework of the Solow model, the composition of trade affects the medium-run transition to the steady state. The composition of trade matters because the price of capital is affected by whether a country exports or imports capital goods. Using unpublished SITC data, we create two international trade composition variables to test this hypothesis for 28 developed and developing countries. We test single-equation, simultaneous-equations, and panel data models with time-series data. All modern time-series procedures are rigorously applied. The results are supportive of the hypothesis; countries that import mostly capital goods and export consumer goods tend to grow faster than countries that export capital goods. There are important implications for developing countries. By focusing on their comparative advantage in producing labour-intensive consumer goods, developing countries will enhance their economic growth more than conventional models suggest. In addition, ceteris paribus, developing labour-abundant and consumer goods-exporting economies will grow faster than developed capital good exporters.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.tandfonline.com/doi/abs/10.1080/0963819032000049150
Download Restriction: Access to full text is restricted to subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Taylor & Francis Journals in its journal The Journal of International Trade & Economic Development.

Volume (Year): 12 (2003)
Issue (Month): 1 ()
Pages: 39-96

as
in new window

Handle: RePEc:taf:jitecd:v:12:y:2003:i:1:p:39-96
Contact details of provider: Web page: http://www.tandfonline.com/RJTE20

Order Information: Web: http://www.tandfonline.com/pricing/journal/RJTE20

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:taf:jitecd:v:12:y:2003:i:1:p:39-96. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.