Trade Structure and Economic Growth
Posted: 22 May 2011
Date Written: 2007
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.
Keywords: Trade, growth, trade structure, trade concentration
JEL Classification: O1, F43, O47, F0, O4
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