Economies in Transition: How Important is Trade Openness for Growth?

28 Pages Posted: 5 Apr 2011

See all articles by Tommaso Nannicini

Tommaso Nannicini

Bocconi University - Department of Economics; IZA Institute of Labor Economics

Andreas Billmeier

International Monetary Fund (IMF) - Middle East and Central Asia Department

Abstract

We investigate the effect of trade openness on economic growth in transition countries using a transparent statistical methodology that leads to data-driven case studies. In particular, we employ synthetic control methods in a panel of transition economies and compare GDP growth in treated (that is, open) countries with growth in a convex combination of similar but untreated (that is, closed) countries. We find that trade liberalization tends to have a positive effect on the pattern of real GDP per capita. One of our most robust results shows that making the transition without opening up to trade considerably hampers growth.

Keywords: C21, C23, F43, O57, P2

Suggested Citation

Nannicini, Tommaso and Billmeier, Andreas, Economies in Transition: How Important is Trade Openness for Growth?. Oxford Bulletin of Economics and Statistics, Vol. 73, No. 3, pp. 287-314, 2011. Available at SSRN: https://ssrn.com/abstract=1802932 or http://dx.doi.org/10.1111/j.1468-0084.2010.00626.x

Tommaso Nannicini (Contact Author)

Bocconi University - Department of Economics ( email )

Via Gobbi 5
Milan, 20136
Italy

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Andreas Billmeier

International Monetary Fund (IMF) - Middle East and Central Asia Department ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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