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Trade policies, investment climate, and exports across countries

  • Seker, Murat

There is a large body of research that explores international trade as a source of the dispersion in income levels and growth performances across countries. The trade liberalization policies undertaken between 1950 and 2006 led to an almost 30 fold growth in the volume of international trade. However this increase has not been homogeneous across countries. This study investigates a possible reason that prevents convergence of countries in export performance. It shows that regulatory quality, customs efficiency, quality of infrastructure, and access to finance among other factors increase export performance. Furthermore, it shows that countries that are relatively more constrained in accessing to foreign markets benefit more from improvements in investment climate than the countries with easier foreign market access. Hence obtaining a favorable investment climate for private sector development should be an important policy objective for relatively closed economies to achieve convergence in export volumes with countries that have more liberal trade policies.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 5654.

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Date of creation: 01 May 2011
Date of revision:
Handle: RePEc:wbk:wbrwps:5654
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  1. Francois, Joseph & Manchin, Miriam, 2007. "Institutions, infrastructure, and trade," Policy Research Working Paper Series 4152, The World Bank.
  2. Francisco Rodriguez & Dani Rodrik, 2001. "Trade Policy and Economic Growth: A Skeptic's Guide to the Cross-National Evidence," NBER Chapters, in: NBER Macroeconomics Annual 2000, Volume 15, pages 261-338 National Bureau of Economic Research, Inc.
  3. Roberto Chang & Linda Kaltani & Norman Loayza, 2005. "Openness Can be Good for Growth: The Role of Policy Complementarities," NBER Working Papers 11787, National Bureau of Economic Research, Inc.
  4. Kee, Hiau Looi & Nicita, Alessandro & Olarreaga, Marcelo, 2006. "Estimating Trade Restrictiveness Indices," CEPR Discussion Papers 5576, C.E.P.R. Discussion Papers.
  5. Dollar, David & Hallward-Driemeier, Mary & Mengistae, Taye, 2006. "Investment climate and international integration," World Development, Elsevier, vol. 34(9), pages 1498-1516, September.
  6. Seker, Murat, 2009. "Importing, Exporting, and Innovation in Developing Countries," MPRA Paper 29904, University Library of Munich, Germany, revised Feb 2011.
  7. Jean-Jacques Hallaert, 2006. "A History of Empirical Literature on the Relationship Between Trade and Growth," Mondes en développement, De Boeck Université, vol. 135(3), pages 63-77.
  8. Francisco Alcalá & Antonio Ciccone, 2003. "Trade and Productivity," Working Papers 12, Barcelona Graduate School of Economics.
  9. Stephen Redding & Anthony Venables, 2004. "Geography and Export Performance: External Market Access and Internal Supply Capacity," NBER Chapters, in: Challenges to Globalization: Analyzing the Economics, pages 95-130 National Bureau of Economic Research, Inc.
  10. James E. Anderson & Douglas Marcouiller, 2002. "Insecurity And The Pattern Of Trade: An Empirical Investigation," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 342-352, May.
  11. Hoekman , Bernard & Nicita, Alessandro, 2008. "Trade Policy, Trade Costs, and Developing Country Trade," Policy Research Working Paper Series 4797, The World Bank.
  12. Clarke, George R.G., 2005. "Beyond tariffs and quotas : why don't African manufacturers export more?," Policy Research Working Paper Series 3617, The World Bank.
  13. Freund, Caroline & Bolaky, Bineswaree, 2008. "Trade, regulations, and income," Journal of Development Economics, Elsevier, vol. 87(2), pages 309-321, October.
  14. John S. Wilson & Catherine L. Mann & Tsunehiro Otsuki, 2003. "Trade Facilitation and Economic Development: A New Approach to Quantifying the Impact," World Bank Economic Review, World Bank Group, vol. 17(3), pages 367-389, December.
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