Openness Can Be Good For Growth : The Role Of Policy Complementarities

Chang, Roberto; Kaltani, Linda; Loayza, Norman

doi:10.1596/1813-9450-3763

Cited by 222 publications

(259 citation statements)

References 44 publications

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“…The evidence from existing studies on these interactions is limited. At the macro level, Chang et al (2005) provide support for the complementary effects of financial development and trade openness on growth whilst industry-level analysis in Manova (2008a) finds that the export gains from relaxations in credit constraints via international equity liberalizations are greater in countries with more restrictive trade policies. At the firm-level, Topalova (2004), for example, considers whether the impact on productivity of trade reforms in India varies across states by financial depth and finds that although the point estimates are similar in states with high or low credit to GDP they are only significant in the former.…”

Section: Discussionmentioning

confidence: 99%

Trade And Financial Sector Reforms : Interactions And Spillovers

Taylor¹

2010

Policy Research Working Papers

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The allocation of production across firms is a potentially important explanation of the productivity gap between rich and poor economies. Reforms to trade policy and the domestic financial sector are often both key elements of policy packages aimed at reducing productive distortions. However, the impact of each reform in reallocating production within an economy is usually analysed independently. This paper asks how do such general equilibrium effects of trade and domestic financial sector reforms interact in terms of their effects on productivity, wages and utility. Motivated by recent firm-level studies, I add two-way linkages between firms' production and exporting decisions and their financial constraints to a general equilibrium heterogeneous firm trade model. The interaction effects between reforms appear qualitatively important. Trade and domestic financial sector reforms have complementary effects on the average productivity and size of domestic producers. However, if much reallocative work has already been done through a well-functioning financial sector, the marginal benefits of trade liberalization for wages and household utility are reduced. Improvements in the ability to use exports as pledgable collateral enhance both the wage and productivity effects of trade reforms. The model also highlights the potential for financial sector reforms in one economy to be exported via the trade channel, affecting decisions to produce or export in the foreign economy and putting downward pressure on foreign real wages.

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Section: Discussionmentioning

confidence: 99%

Trade And Financial Sector Reforms : Interactions And Spillovers

Taylor¹

2010

Policy Research Working Papers

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“…In line with the theoretical model, the public sector covariates are allowed to have some contemporaneous feedbacks on the error term, and following Dollar and Kraay (2004), Loayza et al (2005) and Chang et al (2009), the generalised method of moments (GMM) procedure that addresses endogeneity and controls for unobserved country specific factors is used. Thus, estimates of elasticities for policy variables that are, in principle, subject to improvement through economic and institutional reforms are provided.…”

Section: Introductionmentioning

confidence: 99%

Government Spending, Corruption and Economic Growth

2016

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This paper considers the effects of corruption and government spending on economic growth. It starts from an endogenous growth model and extends it to account for the detrimental effects of corruption on the potentially productive components of government spending, namely military and investment spending. The resulting model is estimated on a sample of African countries and the results show, first, that the growth rate is strongly influenced by the interaction between corruption and military burden, with the interaction between corruption and government investment expenditure having a weaker effect. Second, allowing for the cyclical economic fluctuations in specific countries leaves the estimated elasticities close to those of the full sample. Third, there are significant conditioning variables that need to be taken into account, namely the form of government, political instability and natural resource endowment. These illustrate the cross country heterogeneity when accounting for quantitative direct and indirect effects of key variables on economic growth. Overall, these findings suggest important policy implications.

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“…2 Examples include Dollar (1992), Edwards (1992Edwards ( , 1998, Lee (1993), Sachs and Warner (1995), Harrison (1996), Vamvakidis (1999), Frankel and Romer (1999), Greenaway et al (2002), Yanikkaya (2003), Lee et al (2004), Aksoy and Salinas (2006), Foster (2008), Kneller et al (2008), Wacziarg and Welch (2008), Chang et al (2009), Kim (2011). also during 1960s and it is more likely that their trade policy measures did not change substantially over the period .…”

Section: Introductionmentioning

confidence: 99%

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

Ulasan¹

2012

SSRN Journal

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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.

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Openness Can Be Good For Growth : The Role Of Policy Complementarities

Cited by 222 publications

References 44 publications

Trade And Financial Sector Reforms : Interactions And Spillovers

Trade And Financial Sector Reforms : Interactions And Spillovers

Government Spending, Corruption and Economic Growth

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

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