The Nature of Trade and Growth Linkages

54 Pages Posted: 16 Aug 2017

See all articles by Tatiana Didier

Tatiana Didier

World Bank

Magali Pinat

International Monetary Fund (IMF)

Date Written: August 15, 2017

Abstract

This paper shows new empirical regularities indicating that the structure of trade connections affects the trade-growth nexus. System generalized method of moments estimations indicate that key structural features associated with the composition of traded products and partners matter for growth. The results show that increases in the degree of intra-industry trade, greater insertion into the middle of global value chains, and increases in the shares of differentiated goods, skilled labor-intensive goods, and high-tech-intensive goods in traded baskets are all associated with higher income growth. An increase in the share of trade with countries at the core of the global trade network is also associated with greater growth effects. However, many of these effects are non-linear and depend on the degree of trade openness and labor force education. The results suggest that technological diffusion and learning spillovers play some role in the growth effects associated with the nature of trade connections.

Keywords: Economic Growth, Economic Theory & Research, Consumption, International Trade and Trade Rules, Industrial Economics, Economic Stabilization, Fiscal & Monetary Policy

Suggested Citation

Didier, Tatiana and Pinat, Magali, The Nature of Trade and Growth Linkages (August 15, 2017). World Bank Policy Research Working Paper No. 8168. Available at SSRN: https://ssrn.com/abstract=3019606

Tatiana Didier (Contact Author)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States
(202)458-1525 (Phone)

Magali Pinat

International Monetary Fund (IMF) ( email )

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

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