Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/58224 
Year of Publication: 
2012
Series/Report no.: 
Economics Discussion Papers No. 2012-25
Publisher: 
Kiel Institute for the World Economy (IfW), Kiel
Abstract: 
In this paper, we revisit the empirical evidence on the relationship between trade openness and long-run economic growth over the sample period 1960-2000. In contrast to previous studies focusing mainly on the period 1970-1990, this paper reassesses the openness-growth nexus over a much longer sample period, enabling us to better account both trade policy stance and long-run growth dynamics. We carry out our empirical investigation by employing various openness measures suggested in the literature rather than relying on a few proxy variables. We also construct three additional composite trade policy indexes directly measuring trade policy stance. Our findings indicate that many openness variables are positively and significantly correlated with long-run economic growth. However, in some cases, this result is driven by the presence of a few outlying countries. Adding to the fragility of the openness-growth association, the significance of openness variables disappears once other growth determinants, such as institutions, population heterogeneity, geography and macroeconomic stability are accounted for.
Subjects: 
Economic Growth
trade openness
outliers
weighted least squares
JEL: 
F13
F43
O47
Creative Commons License: 
cc-by-nc Logo
Document Type: 
Working Paper

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