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Measuring Openness

Author

Listed:
  • Jean Imbs
  • Laurent L. Pauwels

Abstract

It is well-known that exporting ï¬ rms grow fast, are large and productive. No such correlation exists at sector (or even country) level, which could happen either because of aggregation or because openness measures are often ad-hoc in aggregate data. We introduce a measure capturing the response of output to foreign shocks in theory: It computes the value of domestically produced goods sold to ï¬ nal consumers abroad, which is easy to calculate from widely available input-output tables. Empirically our measure implies that open sectors are productive, fast growing, and synchronized. No other existing openness measure has these implications at sector level.

Suggested Citation

  • Jean Imbs & Laurent L. Pauwels, 2020. "Measuring Openness," CAMA Working Papers 2020-48, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    • Handle: RePEc:een:camaaa:2020-48
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    More about this item

    Keywords

    Measurement of Openness; Global Value Chains; Shock Propagation; Growth; Synchronization;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F44 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Business Cycles
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts
    • C80 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - General

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