Trade structure and economic growth

Abstract

How do the number of trade partners and the concentration of trade among partners affect the economic growth of a country? We refer to these characteristics as the structure of trade, and explore this question empirically in this study. We find that the structure of trade, independently of the level of trade itself, has an important effect on the rate of economic growth. The results of the study suggest that the number of trading partners is positively correlated with growth across all countries, and this effect is more pronounced for rich countries. Trade concentration is positively correlated with growth for all countries, and the effect is concentrated in poor countries. Previous work has overlooked these characteristics of trade, although we find them to be quite relevant and that they could lead to new ways of understanding the trade�-�growth relationship.Trade, growth, trade structure, trade concentration,

The impact of trade openness on economic growth: The case of Cote d’Ivoire

“…This is the case when the country specializes in sectors where research and development activities are not the core ones (Almeida & Fernandes, 2008). Moreover, trade composition in terms of goods also matters regarding its growth effect (Haussmann et al, 2007;Kali, Méndez, & Reyes, 2007). Whether or not a country gains from international trade also depends on the ease with which foreign technologies are mastered and adapted to the local environment (Grossman & Helpman, 1991b).…”

Does the commodities boom support the export led growth hypothesis? Evidence from Latin American countries

“…Arora and Vamvakidis (2005a) found that a 1 % increase in a country's trade partners was correlated with as much as a 0.8 % increase in its own growth. Other studies that have looked at some measure of trade partners' effect on a country's growth include Arora and Vamvakidis (2005b), Kali et al (2007), Beny andCook (2009), Fagiolo et al (2010) and Dabla-Norris et al (2015).…”

“…Export led growth (ELG) models explain economic growth as resulting from exports due to many factors such as economies of scale due to larger markets, concentration in industries where a country has a comparative advantage, technological improvements, the transmission of better management techniques, and more opportunities for entrepreneurial activities (Feder 1982;Giles and Williams 2000a;Kali et al 2007;Dreger and Herzer 2013). An early ELG model is that of Feder (1982).…”

Trading for Sustainable Development Goals: Trade Policy, Inequality and Poverty in Emerging Economies

“…Considering the measurement of trade liberalization trade openness has a positive impact on growth (Berg and Schmidt, 1994;Sachs et al, 1995;Edwards, 1997;Frankel and Romer, 1999;Dollar and Kraay, 2001;Lee et al, 2004;Kali et al, 2007;Kim, 2011;Jouini, 2015;Sakyi et al, 2015). On the other hand, two studies conducted by Harrison (1996); Irwin and Terviö (2002) found a significant negative correlation between trade and growth by considering trade policy measure instead, but Vamvakidis (2002) identified opposite result in this case.…”