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Trade Partner Diversification and Growth: How Trade Links Matter

Listed author(s):
  • Ali Sina Önder

    ()

    (Department of Economics, University of Bayreuth)

  • Hakan Yilmazkuday

    ()

    (Department of Economics, Florida International University)

We analyze the effects of a country's export connections on its income growth using Trade Partner Diversification (TPD) measures that capture the country's relative importance in the international trade network. On top of the standard trade openness measures, TPD measures are shown to enter growth regressions positively and significantly, where one standard deviation increase in TPD is associated with a 1 to 1.5 percentage point increase in the annual growth rate. Threshold analyses show that TPD measures are positively and significantly correlated with growth in countries that have low financial depth, high inflation, low levels of human capital, or high trade openness.

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File URL: http://economics.fiu.edu/research/working-papers/2016/1606/1606.pdf
File Function: First version, 2016
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Paper provided by Florida International University, Department of Economics in its series Working Papers with number 1606.

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Length: 40 pages
Date of creation: Nov 2016
Handle: RePEc:fiu:wpaper:1606
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