Trade Liberalization and Economic Growth

19 Pages Posted: 23 May 2008

See all articles by Richard Kneller

Richard Kneller

University of Nottingham

C. W. Morgan

affiliation not provided to SSRN

Sunti Kanchanahatakij

affiliation not provided to SSRN

Abstract

There has been a long-held belief that there is an association between economic growth and increased levels of international trade. However, more recent work has questioned this hypothesis and the re-opening of the debate has identified two key areas of contention. One is the extent to which the effects of openness are conditional on factors omitted from the core regression relationship and hence how the hypothesis is tested. The other is the meaning and measurement of openness and liberalization. This paper addresses both these areas by exploring the nature of heterogeneity in growth performance among liberalizing countries using a difference-in-difference approach. The results show that, while in aggregate there appears to be a positive but small impact of trade liberalization on growth, this masks a huge range of responses. Empirical analysis of this heterogeneity shows that a one-size-fits-all policy is not necessarily the most effective, and suggests a case-by-case approach is more appropriate.

Suggested Citation

Kneller, Richard and Morgan, C. W. and Kanchanahatakij, Sunti, Trade Liberalization and Economic Growth. World Economy, Vol. 31, Issue 6, pp. 701-719, June 2008. Available at SSRN: https://ssrn.com/abstract=1136499 or http://dx.doi.org/10.1111/j.1467-9701.2008.01101.x

Richard Kneller (Contact Author)

University of Nottingham ( email )

University Park
Nottingham, NG8 1BB
United Kingdom

C. W. Morgan

affiliation not provided to SSRN

Sunti Kanchanahatakij

affiliation not provided to SSRN

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