Do Natural Barriers Affect the Relationship between Trade Openness and Growth?

19 Pages Posted: 6 Jan 2012

See all articles by Michael Henry

Michael Henry

University of Birmingham

Richard Kneller

University of Nottingham

Chris Milner

University of Nottingham - School of Economics

Sourafel Girma

Nottingham University Business School

Date Written: February 2012

Abstract

This article investigates whether there are threshold effects in the relationship between openness and productivity growth that are fashioned by a country's natural barriers, using a cross‐country growth model. Alternative methods of modelling thresholds are explored. An endogenous threshold model is shown to be preferable to the use of interaction effects. The results identify critical levels of natural barriers which affect how greater openness or liberalization impacts on productivity growth. We find that only countries with higher natural barriers receive growth benefits from trade liberalization.

JEL Classification: O49, F13

Suggested Citation

Henry, Michael and Kneller, Richard and Milner, Chris and Girma, Sourafel, Do Natural Barriers Affect the Relationship between Trade Openness and Growth? (February 2012). Oxford Bulletin of Economics and Statistics, Vol. 74, Issue 1, pp. 1-19, 2012. Available at SSRN: https://ssrn.com/abstract=1980552 or http://dx.doi.org/10.1111/j.1468-0084.2011.00636.x

Michael Henry

University of Birmingham ( email )

Edgbaston, Birmingham B15 2TT
United Kingdom

Richard Kneller

University of Nottingham ( email )

University Park
Nottingham, NG8 1BB
United Kingdom

Chris Milner

University of Nottingham - School of Economics ( email )

University Park
Nottingham, NG7 2RD
United Kingdom

Sourafel Girma

Nottingham University Business School ( email )

Jubilee Campus
Nottingham, NG8 1BB
United Kingdom
+44 0 115 8466656 (Phone)

HOME PAGE: http://www.nottingham.ac.uk/~lizsmg/

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