Download This PaperTrade and Economic Growth: A Re-Examination of the Empirical Evidence
24 Pages Posted: 24 Feb 2012
Date Written: February 23, 2012
Abstract
While trade integration is often regarded as a principal determinant of economic growth, the empirical evidence for a causal linkage between trade and growth is ambiguous. This paper argues that the effect of trade in dynamic panel estimations depends crucially on the specification of trade. Both from a theoretical as well as an empirical point of view one specification is preferred: the volume of exports and imports as a share of lagged total GDP. For this trade measure, a positive and highly significant impact on economic growth can be found.
Keywords: Openness, Trade, Growth
JEL Classification: F11, F43, C23
Suggested Citation: Suggested Citation
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