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Testing the linkages between trade and productivity growth

  • C. Economidou
  • Antu Panini Murshid

The authors examine the effect of trade on productivity growth using data from nine manufacturing industries across 12 OECD countries over the period 1978-97. Because causality between productivity growth and trade share runs both ways, geographical characteristics of countries are used to instrument for average bilateral trade volumes over the 20-year period. In addition, to exploit the time-series nature of the data, the authors construct a panel dataset and employ dynamic panel data techniques. After controlling for industry-specific heterogeneity, the results indicate that increased exposure to trade, in particular higher import volumes, exerts a positive influence on industries' productivity growth. However, the effect is rather small. Copyright � 2008 The Authors. Journal compilation � 2008 Blackwell Publishing Ltd.

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File URL: http://dspace.library.uu.nl/bitstream/handle/1874/31466/07-22.pdf
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Paper provided by Utrecht School of Economics in its series Working Papers with number 07-22.

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Date of creation: 2007
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Handle: RePEc:use:tkiwps:0722
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  1. S. Baranzoni & P. Bianchi & L. Lambertini, 2000. "Market Structure," Working Papers 368, Dipartimento Scienze Economiche, Universita' di Bologna.
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