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Trade, extent of the market and economic growth 1960-1996

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Abstract

We find that trade and domestic market size are robust determinants of economic growth over the 1960-1996 period when trade openness is measured as the US dollar value of imports and exports relative to GDP in PPP US$ ('real openness'). When trade openness is measured as the US dollar value of imports and exports relative to GDP in exchange rate US$ ('nominal openness') however, trade and the size of domestic markets are often non-robust determinants of growth. We argue that real openness is the more appropriate measure of trade and that our empirical results should be seen as evidence in favor of the extent-of-the-market hypothesis.

Suggested Citation

  • Francisco Alcalá & Antonio Ciccone, 2003. "Trade, extent of the market and economic growth 1960-1996," Economics Working Papers 765, Department of Economics and Business, Universitat Pompeu Fabra, revised Dec 2003.
  • Handle: RePEc:upf:upfgen:765
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    Citations

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    Cited by:

    1. Chen, Natalie & Imbs, Jean & Scott, Andrew, 2009. "The dynamics of trade and competition," Journal of International Economics, Elsevier, vol. 77(1), pages 50-62, February.
    2. Abu Hatab, Assem, 2015. "The Impact of Regional Integration on Intra-Arab Trade in Agrifood Commodities: A Panel Data Approach," MPRA Paper 67991, University Library of Munich, Germany, revised 07 Jun 2015.
    3. M. Shahe Emran & Forhad Shilpi, 2012. "The extent of the market and stages of agricultural specialization," Canadian Journal of Economics, Canadian Economics Association, vol. 45(3), pages 1125-1153, August.
    4. Trew, Alex, 2009. "Institutions and the Scale Effect," SIRE Discussion Papers 2009-51, Scottish Institute for Research in Economics (SIRE).

    More about this item

    Keywords

    Extent of the market; institutions; growth;

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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