Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/129559
Authors: 
Dürnecker, Georg
Meyer, Moritz
Vega-Redondo, Fernando
Year of Publication: 
2014
Series/Report no.: 
Working Paper Series, Department of Economics, University of Mannheim 14-06
Abstract: 
In this paper, we propose a new approach to represent a country's outward orientation. Prior work mostly uses indicators of aggregate trade intensity, trade policy or trade restrictiveness. Our approach offers a broader perspective as it measures a country's level of integration not only by its set of direct trade connections with the rest of the world but also through the full architecture of its second, third, and all other higher-order connections. We apply our methodology to a sample of 167 countries spanning the period from 1962 to 2009 and perform a Bayesian modelaveraging analysis on the determinants of growth. We find a prominent positive effect of integration on a country's level of per capita income, while the aforementioned traditional measures of outward orientation display only a secondary, largely insignificant, weight. This, we argue, highlights the network basis of economic growth and adds a novel perspective to the notion of economic openness. We also perform several sensitivity checks and conclude that our baseline findings are extremely robust to different data input and alternative assumptions about the computation of country integration.
Subjects: 
Globalization
Trade Integration
Economic Growth
Network Analysis
Dynamic Panel Model
Bayesian Model Averaging
JEL: 
C11
D85
F15
F63
O40
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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