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Openness and growth in a historical perspective: a VECM approach

Author

Listed:
  • Giovanni Federico

    (University of Pisa, CEPR)

  • Paul Sharp

    (University of Southern Denmark, CAGE, CEPR)

  • Antonio Tena-Junguito

    (Universidad Carlos III Madrid)

Abstract

Since Adam Smith, most economists have held the belief that trade fosters economic growth, although it has not been possible to establish a strong causal relationship. The results of growth regressions are, at best, mixed, and several historical studies have found a positive relationship between tariffs and economic growth in the nineteenth century. This paper adopts a different strategy. We look for cointegration between GDP per capita and openness for about thirty countries since 1830. About half return no cointegration – i.e. no relationship. The rest show mixed results, which change through time. An ordered probit model suggests that significantly positive relationships are more likely at low-to-middle income levels.

Suggested Citation

  • Giovanni Federico & Paul Sharp & Antonio Tena-Junguito, 2017. "Openness and growth in a historical perspective: a VECM approach," Working Papers 0118, European Historical Economics Society (EHES).
    • Handle: RePEc:hes:wpaper:0118
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    File URL: http://www.ehes.org/EHES_118.pdf
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    References listed on IDEAS

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    1. Markus Lampe & Paul Sharp, 2013. "Tariffs and income: a time series analysis for 24 countries," Cliometrica, Journal of Historical Economics and Econometric History, Association Française de Cliométrie (AFC), vol. 7(3), pages 207-235, September.
    2. Federico, Giovanni & Tena Junguito, Antonio, 2016. "World trade, 1800-1938 : a new data-set," IFCS - Working Papers in Economic History.WH wp16-01, Universidad Carlos III de Madrid. Instituto Figuerola.
    3. Robert C. Feenstra, 1998. "Integration of Trade and Disintegration of Production in the Global Economy," Journal of Economic Perspectives, American Economic Association, vol. 12(4), pages 31-50, Fall.
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    More about this item

    Keywords

    Openness; growth; VECM; cointegration; trade;

    JEL classification:

    • F1 - International Economics - - Trade
    • N1 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations
    • N7 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services

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