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Once More into the Breach: Economic Growth and Integration

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  • Andrew Warner

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Abstract

This paper re-examines the evidence linking poor growth during the era of import substituting industrialization with trade restrictions. Recent work, notably Rodriguez and Rodrik (2000), asserts that all the evidence is fragile, implying that economists who believe that trade restrictions played a role in this poor performance do so largely on faith. This paper argues that this criticism ignores crucial evidence and tests regression specifications that are either not relevant for the question or are bound to have low statistical power. After revising and updating measures of trade openness used in Sachs and Warner (1995), the weight of the evidence argues that trade restrictions were indeed harmful to growth during this period. While there is certainly room for debate about how best to use the available data on trade restrictions, a large number of variants yield strong and consistent results. Furthermore, although some assert that it is impossible to empirically distinguish measures of trade restriction from other policies or institutions, the findings are not diminished even after controlling for many alternative economic policies or institutions.

Suggested Citation

  • Andrew Warner, 2003. "Once More into the Breach: Economic Growth and Integration," Working Papers 34, Center for Global Development.
  • Handle: RePEc:cgd:wpaper:34
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    File URL: http://www.cgdev.org/content/publications/detail/2757
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    References listed on IDEAS

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    1. Ingvild Almas, 2012. "International Income Inequality: Measuring PPP Bias by Estimating Engel Curves for Food," American Economic Review, American Economic Association, vol. 102(2), pages 1093-1117, April.
    2. Angus Deaton & Jed Friedman & Vivi Alatas, 2004. "Purchasing power parity exchange rates from household survey data: India and Indonesia," Working Papers 173, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
    3. Lant Pritchett & Charles Kenny, 2013. "Promoting Millennium Development Ideals: The Risks of Defining Development Down," CID Working Papers 265, Center for International Development at Harvard University.
    4. repec:pri:rpdevs:deaton_pppp_version_aug_06.pdf is not listed on IDEAS
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    Citations

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    Cited by:

    1. Giavazzi, Francesco & Tabellini, Guido, 2005. "Economic and political liberalizations," Journal of Monetary Economics, Elsevier, vol. 52(7), pages 1297-1330, October.
    2. Salinas, Gonzalo & Aksoy, Ataman, 2006. "Growth before and after trade liberalization," Policy Research Working Paper Series 4062, The World Bank.
    3. Sambit Bhattacharyya & Steve Dowrick & Jane Golley, 2009. "Institutions and Trade: Competitors or Complements in Economic Development?," The Economic Record, The Economic Society of Australia, vol. 85(270), pages 318-330, September.
    4. Bhattacharyya, Sambit, 2012. "Trade liberalization and institutional development," Journal of Policy Modeling, Elsevier, vol. 34(2), pages 253-269.
    5. Bardhan, Pranab, 2006. "Globalization and rural poverty," World Development, Elsevier, vol. 34(8), pages 1393-1404, August.
    6. Antoni Estevadeordal & Alan M. Taylor, 2013. "Is the Washington Consensus Dead? Growth, Openness, and the Great Liberalization, 1970s–2000s," The Review of Economics and Statistics, MIT Press, vol. 95(5), pages 1669-1690, December.
    7. Pranab Bardhan, 2006. "Globalization, Inequality, and Poverty," IDB Publications (Working Papers) 9126, Inter-American Development Bank.
    8. Pranab Bardhan, 2006. "Globalization, Inequality, and Poverty," IDB Publications (Working Papers) 2329, Inter-American Development Bank.
    9. Foellmi, Reto & Oechslin, Manuel, 2012. "Globalization and Productivity in the Developing World," Economics Working Paper Series 1203, University of St. Gallen, School of Economics and Political Science.
    10. Padamja Khandelwal, 2004. "Comesa and Sadc; Prospects and Challenges for Regional Trade Integration," IMF Working Papers 04/227, International Monetary Fund.

    More about this item

    Keywords

    import substitution; trade; economic growth; integration;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

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