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Measuring the Dynamic Gains from Trade

  • Wacziarg, Romain

    (Stanford U)

This paper investigates the linkages between trade policy and economic growth in a panel of 57 countries, between 1970 and 1989. We develop a new measure of trade policy openness, based on the policy component of trade shares. This is used in a simultaneous equations system aimed at identifying the effect of trade policy on several determinants of growth. The results of this paper suggest a positive impact of trade policy openness on economic growth, with the accelerated accumulation of physical capital accounting for more than one half of the total effect; smaller effects operate through enhanced technological transmissions and improvements in the quality of macroeconomic policy. This decomposition is robust with respect to alternative specifications and time periods. We also successfully test whether the model exhaustively captures the effects of trade policy on growth.

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Paper provided by Stanford University, Graduate School of Business in its series Research Papers with number 1654.

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Date of creation: Sep 2000
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Handle: RePEc:ecl:stabus:1654
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  1. Robert J. Barro & Xavier Sala-I-Martin, 1992. "Public Finance in Models of Economic Growth," Review of Economic Studies, Oxford University Press, vol. 59(4), pages 645-661.
  2. Alberto Alesina & Roberto Perotti, 1993. "Income Distribution, Political Instability, and Investment," NBER Working Papers 4486, National Bureau of Economic Research, Inc.
  3. Easterly, William & DEC, 1993. "How much do distortions affect growth?," Policy Research Working Paper Series 1215, The World Bank.
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  14. Robert J. Barro & Xavier Sala-i-Martin, 1995. "Technological diffusion, convergence and growth," Economics Working Papers 116, Department of Economics and Business, Universitat Pompeu Fabra.
  15. Francisco Rodriguez & Dani Rodrik, 2001. "Trade Policy and Economic Growth: A Skeptic's Guide to the Cross-National Evidence," NBER Chapters, in: NBER Macroeconomics Annual 2000, Volume 15, pages 261-338 National Bureau of Economic Research, Inc.
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  31. repec:oup:restud:v:59:y:1992:i:4:p:645-61 is not listed on IDEAS
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