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Institutions and Structural Unemployment: North-South Trade, Openness and Growth

In models of endogenous growth, international trade can impact upon growth by allowing access to the innovative products of other countries. Since developing countries do little if any innovation, it is primarily through trade with developed countries that they profit from higher levels of technological development. In this paper we construct an empirical model to estimate trade flows from the North to the South. Using the results of this model we construct a measure of openess to Northern imports, based on the deviation of actual imports from that predicted by our model.We find that this measure of openness is significantly and robustly related to economic growth, suggesting that trade with advanced countries can facilitate growth through the absorption of advanced technology.

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File URL: http://homepage.univie.ac.at/Papers.Econ/RePEc/vie/viennp/vie0108.pdf
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Paper provided by University of Vienna, Department of Economics in its series Vienna Economics Papers with number 0108.

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Date of creation: Jun 2001
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Handle: RePEc:vie:viennp:0108
Contact details of provider: Web page: http://www.univie.ac.at/vwl

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  1. Bergstrand, Jeffrey H, 1985. "The Gravity Equation in International Trade: Some Microeconomic Foundations and Empirical Evidence," The Review of Economics and Statistics, MIT Press, vol. 67(3), pages 474-81, August.
  2. Edward E. Leamer, 1987. "Measures of Openness," UCLA Economics Working Papers 447, UCLA Department of Economics.
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  17. Syrquin, Moshe & Chenery, Hollis, 1989. "Three decades of industrialization," MPRA Paper 32771, University Library of Munich, Germany.
  18. Sala-i-Martin, Xavier, 1997. "I Just Ran Two Million Regressions," American Economic Review, American Economic Association, vol. 87(2), pages 178-83, May.
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  20. Pritchett, Lant, 1996. "Measuring outward orientation in LDCs: Can it be done?," Journal of Development Economics, Elsevier, vol. 49(2), pages 307-335, May.
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  31. repec:umd:umdeco:rodriguez9901 is not listed on IDEAS
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