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Measuring outward orientation in developing countries : can it be done?

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  • Pritchett, Lant

Abstract

The pressure for trade reform as an integral component of adjustment programs has intensified the ongoing debate about the benefits of trade liberalization of trade regimes in the less developed countries (LDCs). This heightened interest has in turn generated continued empirical study of the relationship between economic performance and trade policy orientation. One branch of this overall policy-performance literature uses cross-country regressions relating economic performance and a measure of policy"outward orientation"or"openness"to investigate this relationship. This paper attempts to move the debate on the empirical cross-country relationship between trade policy and economic performance backwards one step by asking the question, can the economists'intuitive notion of outwardly oriented policy captured empirically? It reviews some principles of the measurement of trade barriers and examines the relationship between four types of empirical measures of outward orientation across countries, including: (a) the share of trade in GDP; (b) the average tariff and coverage ratio of non-tariffbarriers; (c) measures of the deviation of countries'actual trade pattern from the pattern predicted from a model of resource based comparative advantage; and (d) a measure of real price distortions. The paper also discusses the interpretation and implications of the lack of association between the various measures.

Suggested Citation

  • Pritchett, Lant, 1991. "Measuring outward orientation in developing countries : can it be done?," Policy Research Working Paper Series 566, The World Bank.
    • Handle: RePEc:wbk:wbrwps:566
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    Citations

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    Cited by:

    1. Judith Dean, 1995. "From protectionism to free trade fever? Recent reforms in developing countries," Open Economies Review, Springer, vol. 6(4), pages 369-385, October.
    2. Bernstein, Jeffrey R. & Weinstein, David E., 2002. "Do endowments predict the location of production?: Evidence from national and international data," Journal of International Economics, Elsevier, vol. 56(1), pages 55-76, January.
    3. Matin, Kazi M., 1992. "Openness and economic performance in sub-Saharan Africa : evidence from time-series cross-country analysis," Policy Research Working Paper Series 1025, The World Bank.
    4. Manuel R. Agosin, 1994. "Réformes des politiques commerciales et performances économiques," Revue Tiers Monde, Programme National Persée, vol. 35(139), pages 499-520.
    5. Harrison, Ann, 1996. "Openness and growth: A time-series, cross-country analysis for developing countries," Journal of Development Economics, Elsevier, vol. 48(2), pages 419-447, March.
    6. Baek, Jungho & Cho, Yongsung & Koo, Won W., 2009. "The environmental consequences of globalization: A country-specific time-series analysis," Ecological Economics, Elsevier, vol. 68(8-9), pages 2255-2264, June.
    7. Krishna, Kala & Ozyildirim, Ataman & Swanson, Norman R., 2003. "Trade, investment and growth: nexus, analysis and prognosis," Journal of Development Economics, Elsevier, vol. 70(2), pages 479-499, April.
    8. Dani Rodrik, 1993. "Trade and Industrial Policy Reform in Developing Countries: A Review of Recent Theory and Evidence," NBER Working Papers 4417, National Bureau of Economic Research, Inc.
    9. De Lombaerde, Philippe A.A., 2009. "On the dynamic measurement of economic openness," Journal of Policy Modeling, Elsevier, vol. 31(5), pages 731-736, September.
    10. Krishna, Kala, 2009. "Background Paper on the IMF's Trade Restrictiveness Index," MPRA Paper 21316, University Library of Munich, Germany.
    11. Ernesto R. Gantman & Marcelo P. Dabós, 2018. "Does trade openness influence the real effective exchange rate? New evidence from panel time-series," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 9(1), pages 91-113, March.
    12. Charles Ackah, & Oliver Morrissey, 2007. "Trade Liberalisation is Good for You if You are Rich," Discussion Papers 07/01, University of Nottingham, CREDIT.
    13. Assaf Razin & Andrew Rose, 1992. "Business Cycle Volatility and Openness: An Exploratory Cross-Section Analysis," NBER Working Papers 4208, National Bureau of Economic Research, Inc.
    14. Edwards, Sebastian, 1998. "Openness, Productivity and Growth: What Do We Really Know?," Economic Journal, Royal Economic Society, vol. 108(447), pages 383-398, March.
    15. Chandran, V.G.R. & Munusamy, 2009. "Trade openness and manufacturing growth in Malaysia," Journal of Policy Modeling, Elsevier, vol. 31(5), pages 637-647, September.
    16. Banerji, Arup & Ghanem, Hafez, 1995. "Political regimes, trade, and labor policies in developing countries," Policy Research Working Paper Series 1521, The World Bank.
    17. Ann Harrison & Ana Revenga, 1995. "The Effects of Trade Policy Reform: What Do We Really Know?," NBER Working Papers 5225, National Bureau of Economic Research, Inc.
    18. Haddad, Mona, 1993. "How trade liberalization affected productivity in Morocco," Policy Research Working Paper Series 1096, The World Bank.
    19. Godfred William Cantah & Gabriel William Brafu-Insaidoo & Emmanuel Agyapong Wiafe & Abass Adams, 2018. "FDI and Trade Policy Openness in Sub-Saharan Africa," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 44(1), pages 97-116, January.

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