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Growth and Structural Reforms; A New Assessment

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  • Lone Engbo Christiansen
  • Thierry Tressel
  • Martin Schindler

Abstract

This paper presents a simultaneous assessment of the relationship between economic performance and three groups of economic reforms: domestic finance, trade, and the capital account. Among these, domestic financial reforms, and trade reforms, are robustly associated with economic growth, but only in middle-income countries. In contrast, we do not find any systematic positive relationship between capital account liberalization and economic growth. Moreover, the effect of domestic financial reforms on economic growth in middle-income countries is explained by improvements in measured aggregate TFP growth, not by higher aggregate investment. We present evidence that variation in the quality of property rights helps explain the heterogeneity of the effectiveness of financial and trade reforms in developing countries. The evidence suggests that sufficiently developed property rights are a precondition for reaping the benefits of economic reform. Our results are robust to endogeneity bias and a number of alternative specifications.

Suggested Citation

  • Lone Engbo Christiansen & Thierry Tressel & Martin Schindler, 2009. "Growth and Structural Reforms; A New Assessment," IMF Working Papers 09/284, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:09/284
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    2. Christiansen, Lone & Schindler, Martin & Tressel, Thierry, 2013. "Growth and structural reforms: A new assessment," Journal of International Economics, Elsevier, pages 347-356.
    3. Fabrizio Coricelli & Mathilde Maurel, 2011. "Growth and Crisis in Transition: A Comparative Perspective," Review of International Economics, Wiley Blackwell, pages 49-64.
    4. Eleftherios Goulas & Athina Zervoyianni, 2012. "Growth, Deficits and Uncertainty in a Panel of 28 Countries," Working Paper series 52_12, Rimini Centre for Economic Analysis.
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    7. Mendoza, Ronald U. & Canare, Tristan A. & Ang, Alvin, 2015. "Doing Business: A Review of Literature and Its Role in APEC 2015," Research Paper Series DP 2015-37, Philippine Institute for Development Studies.
    8. Kalyvitis, Sarantis & Vlachaki, Irene, 2012. "When does more aid imply less democracy? An empirical examination," European Journal of Political Economy, Elsevier, pages 132-146.
    9. Olarreaga, Marcelo, 2016. "Trade, Infrastructure, and Development," ADBI Working Papers 626, Asian Development Bank Institute.
    10. Eleftherios Goulas & Athina Zervoyianni, 2013. "Economic growth and crime: does uncertainty matter?," Applied Economics Letters, Taylor & Francis Journals, vol. 20(5), pages 420-427, March.
    11. Goulas, Eleftherios & Zervoyianni, Athina, 2013. "Growth, deficits and uncertainty: Theoretical aspects and empirical evidence from a panel of 27 countries," The Quarterly Review of Economics and Finance, Elsevier, vol. 53(4), pages 380-392.
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    15. Campos, Nauro F & De Grauwe, Paul & Ji, Yuemei, 2017. "Structural Reforms, Growth and Inequality: An Overview of Theory, Measurement and Evidence," IZA Discussion Papers 11159, Institute for the Study of Labor (IZA).
    16. Eleftherios Goulas & Athina Zervoyianni, 2013. "Growth, Deficits and Uncertainty: Theoretical Aspects and Empirical Evidence," Working Paper series 53_13, Rimini Centre for Economic Analysis.
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    More about this item

    Keywords

    Economic models; Economic reforms; Cross country analysis; Economic growth; Capital account; International financial system; International trade; Fiscal policy; Globalization; Governance; Trade liberalization; Liberalization; Domestic Finance; Trade: Capital Account; tfp; real gdp; trade reforms; gdp per capita;

    JEL classification:

    • F3 - International Economics - - International Finance
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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