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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

    as
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    3. Barbara Pistoresi & Alberto Rinaldi, 2010. "Exports,growth and causality. New evidence on Italy: 1863-2004," Department of Economics 0633, University of Modena and Reggio E., Faculty of Economics "Marco Biagi".
    4. Giovanni Federico & Antonio Tena-Junguito, 2016. "World trade, 1800-1938: a new data-set," Working Papers 0093, European Historical Economics Society (EHES).
    5. Tarlok Singh, 2010. "Does International Trade Cause Economic Growth? A Survey," The World Economy, Wiley Blackwell, vol. 33(11), pages 1517-1564, November.
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    7. Giovanni Federico & Antonio Tena-Junguito, 2017. "A tale of two globalizations: gains from trade and openness 1800–2010," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 153(3), pages 601-626, August.
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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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