Does Trade Cause Growth?

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may Bülent Ulaşan Central Bank of the Republic of TurkeyAbstract In this paper, we revisit the empirical evidence on the relationship between trade openness and long-run economic growth over the sample period 1960-2000. In contrast to previous studies focusing mainly on the period 1970-1990, this paper reassesses the openness-growth nexus over a much longer sample period, enabling us to better account both trade policy stance and long-run growth dynamics. We carry out our empirical investigation by employing various openness measures suggested in the literature rather than relying on a few proxy variables. We also construct three additional composite trade policy indexes directly measuring trade policy stance. Our findings indicate that many openness variables are positively and significantly correlated with long-run economic growth. However, in some cases, this result is driven by the presence of a few outlying countries. Adding to the fragility of the openness-growth association, the significance of openness variables disappears once other growth determinants, such as institutions, population heterogeneity, geography and macroeconomic stability are accounted for.JEL F13, F43, O47.

Section: Deviation Measuresmentioning

confidence: 99%

Section: Deviation Measuresmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Openness to International Trade and Economic Growth: A Cross-Country Empirical Investigation

Ulasan¹

2012

“…But a deeper insight into the interaction between formal and informal institutions (including values and norms) can help policy makers improve decisions regarding formal institutions. Frankel & Romer (1999): Natural log of trade share predicted by a gravity model of international trade which takes both a country's population and its geographical location into account. in parentheses, * significant at 5%; ** significant at 1%.…”

Section: Discussionmentioning

confidence: 99%

Values and Norms Matter - On the Basic Determinants of Long-Run Economic Development

Voigt

Park

2008

“…In the above equation the degree of price isolation of a country i relative to rest of world is re ‡ected in terms of its population, P op i ; area, Area i ; and its natural level of openness to trade determined by its geographic characteristics, OP F R i ; as constructed by Frankel and Romer (1999). 10 The squared term of ln y P P P i is included to capture potential non-linearities in the relationship between real and nominal income.…”

Section: Introductionmentioning

confidence: 99%

Reassessing the Evolution of World Trade, 1870-1949

Klasing

Milionis

2012

The typical narrative regarding the evolution of world trade prior to World War II refers to a secular rise that started around 1870 and a subsequent collapse that began in 1914. This narrative, though, is based on measures of trade openness that do not fully take into account purchasing power di¤erences across countries, as in the literature non-PPPadjusted trade data are typically denominated by PPP-adjusted GDP data. The present paper seeks to resolve this inconsistency by constructing new trade share estimates for 51 countries spanning the period from 1870 to 1949 by combining historical import and export data with non-PPP-adjusted GDP values that we estimate via the "short-cut" method. Our estimates indicate a much more pronounced rise and fall of world trade over this period with trade shares being on average 32% higher than previously documented and the world's level of openness to trade in 1913 being comparable to that in 1974. In addition, performing a similar correction for purchasing power di¤erences in the context of standard gravity regressions for the 1870-1939 period we …nd that the existing literature has overestimated the importance of income movements during this period relative to tari¤s changes and the evolution of the gold standard.