Testing the Linkages between Trade and Productivity Growth

16 Pages Posted: 27 Oct 2008

See all articles by Claire Economidou

Claire Economidou

Utrecht University - School of Economics

Antu Panini Murshid

affiliation not provided to SSRN

Abstract

The authors examine the effect of trade on productivity growth using data from nine manufacturing industries across 12 OECD countries over the period 1978-97. Because causality between productivity growth and trade share runs both ways, geographical characteristics of countries are used to instrument for average bilateral trade volumes over the 20-year period. In addition, to exploit the time-series nature of the data, the authors construct a panel dataset and employ dynamic panel data techniques. After controlling for industry-specific heterogeneity, the results indicate that increased exposure to trade, in particular higher import volumes, exerts a positive influence on industries' productivity growth. However, the effect is rather small.

Suggested Citation

Economidou, Claire and Murshid, Antu Panini, Testing the Linkages between Trade and Productivity Growth. Review of Development Economics, Vol. 12, Issue 4, pp. 845-860, November 2008. Available at SSRN: https://ssrn.com/abstract=1287890 or http://dx.doi.org/10.1111/j.1467-9361.2008.00457.x

Claire Economidou (Contact Author)

Utrecht University - School of Economics ( email )

Kriekenpitplein 21-22
Adam Smith Building
Utrecht, 3584 EC
Netherlands

Antu Panini Murshid

affiliation not provided to SSRN

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