IDEAS home Printed from
   My bibliography  Save this paper

Working Paper 63 - Trade, Trade Liberalisation and Economic Growth: Theory and Evidence



There can be little doubt that, historically, trade has acted as an important engine ofgrowth for countries at different stages of development, not only by contributing to a moreefficient allocation of resources within countries, but also by transmitting growth from onepart of the world to another. There are static and dynamic gains to be had from tradebetween countries but there is nothing in the theory of trade that says that the gains areequitably distributed. Also, there is nothing in the theory of Customs Unions that says thatthe gains from trade will be equitably distributed between members. Indeed, the CustomsUnion as a whole may be welfare-reducing if trade diversion exceeds trade creation. Recentresearch suggests that regional trade agreements, reduce growth and investment, butgeneralised trade liberalisation in the form of unilateral tariff reductions (or the reduction ofnon-tariff barriers to trade) improves growth performance. Export growth relax the balanceof payments constraint on demand by providing the foreign exchange to pay for the importcontent of higher levels of consumption, investment and government expenditure. Mostdeveloping countries are constrained in their growth performance by a shortage of foreignexchange and could therefore grow faster with more exports.

Suggested Citation

  • Anthony Thirlwall, 2002. "Working Paper 63 - Trade, Trade Liberalisation and Economic Growth: Theory and Evidence," Working Paper Series 197, African Development Bank.
  • Handle: RePEc:adb:adbwps:197

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Jaime De Melo & Arvind Panagariya & Dani Rodrik, 2015. "The New Regionalism: A Country Perspective," World Scientific Book Chapters,in: Developing Countries in the World Economy, chapter 14, pages 323-357 World Scientific Publishing Co. Pte. Ltd..
    2. Edwards, Sebastian, 1992. "Trade orientation, distortions and growth in developing countries," Journal of Development Economics, Elsevier, vol. 39(1), pages 31-57, July.
    3. J. S. L. McCombie & A. P. Thirlwall, 1997. "The Dynamic Harrod Foreign Trade Multiplier and the Demand-orientated Approach to Economic Growth: an Evaluation," International Review of Applied Economics, Taylor & Francis Journals, vol. 11(1), pages 5-26.
    4. Anthony Philip Thirlwall, 1983. "Foreign trade elasticities in centre-periphery models of growth and development," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 36(146), pages 249-261.
    5. Anthony Thirlwall, 1995. "The Terms of Trade, Debt and Development: with Particular Reference to Africa," African Development Review, African Development Bank, vol. 7(1), pages 1-34.
    6. Feder, Gershon, 1983. "On exports and economic growth," Journal of Development Economics, Elsevier, vol. 12(1-2), pages 59-73.
    7. Esfahani, Hadi Salehi, 1991. "Exports, imports, and economic growth in semi-industrialized countries," Journal of Development Economics, Elsevier, vol. 35(1), pages 93-116, January.
    8. Dixon, R & Thirlwall, A P, 1975. "A Model of Regional Growth-Rate Differences on Kaldorian Lines," Oxford Economic Papers, Oxford University Press, vol. 27(2), pages 201-214, July.
    Full references (including those not matched with items on IDEAS)

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:adb:adbwps:197. 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: (Adeleke Oluwole Salami). General contact details of provider: .

    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 CitEc recognized a reference but did not link an item in RePEc 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.