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Incremental Trade and Endogenous Growth: A q-Theory Approach

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  • Richard E. Baldwin
  • Rikard Forslid

Abstract

Most trade-and-growth studies focus on the growth effects of autarky-to-free-trade changes, rather than those of incremental liberalizations. This paper characterizes how the strength and sign of openness-and-growth links depend upon the nature and level of trade barriers. For most types of trade barriers, we find that liberalization raises or lowers growth depending upon the initial level of the barrier. This suggests empirical studies that pool data from high and low protection nations are mis-specified, and that policy lessons based on autarky-to-free-trade results are of limited use to policymakers.

Suggested Citation

  • Richard E. Baldwin & Rikard Forslid, 1998. "Incremental Trade and Endogenous Growth: A q-Theory Approach," NBER Working Papers 6477, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:6477
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    Cited by:

    1. Baldwin, Richard E. & Forslid, Rikard, 2000. "Trade liberalisation and endogenous growth: A q-theory approach," Journal of International Economics, Elsevier, vol. 50(2), pages 497-517, April.
    2. Fabio Cerina & Francesco Pigliaru, 2007. "Agglomeration and Growth in the NEG: A Critical Assessment," Chapters, in: Bernard Fingleton (ed.), New Directions in Economic Geography, chapter 5, Edward Elgar Publishing.

    More about this item

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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