Growth Before and After Trade Liberalization

The empirical study of the impact of trade liberalization has not convinced the skeptics about the economic gains after trade reforms. Some have even argued that trade reforms have led to economic collapse and to deindustrialization. Using a sample that excludes countries that were subject to major...

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Main Authors:	Salinas, Gonzalo, Aksoy, Ataman
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2012
Subjects:	ABSOLUTE VALUE AGGREGATE INCOME ANNUAL GROWTH AVERAGE GROWTH AVERAGE TARIFFS BENEFITS OF TRADE CAPITAL ACCUMULATION CAPITAL INFLOWS CAPITAL INVESTMENT CONDITIONAL CONVERGENCE CONSTANT RETURNS TO SCALE CONVERGENCE HYPOTHESIS CURRENCY CURRENT ACCOUNT CURRENT ACCOUNT BALANCE DEBT DEPENDENT VARIABLE DEREGULATION DEVALUATION DEVELOPING COUNTRIES DEVELOPMENT INDICATORS ECONOMETRICS ECONOMIC CRISIS ECONOMIC GROWTH ECONOMIC IMPACT ECONOMIC PERFORMANCE ECONOMIC REFORM ECONOMIC STAGNATION ECONOMICS EDUCATIONAL ATTAINMENT EMPIRICAL GROWTH LITERATURE EMPIRICAL LITERATURE EMPIRICAL STUDIES ERROR TERM EXCHANGE RATE MISALIGNMENT EXPORT DIVERSIFICATION EXPORTS EXTERNAL DEBT EXTERNAL SHOCKS EXTERNALITIES FIXED EFFECTS FOREIGN CAPITAL FOREIGN DIRECT INVESTMENT FOREIGN EXCHANGE FREE TRADE GDP GDP PER CAPITA GROSS CAPITAL FORMATION GROSS DOMESTIC PRODUCT GROWTH DETERMINANTS GROWTH LITERATURE GROWTH MODEL GROWTH MODELS GROWTH PERFORMANCE GROWTH RATE GROWTH RATES GROWTH REGRESSIONS HIGH GROWTH HUMAN CAPITAL IMPACT OF TRADE IMPACT OF TRADE LIBERALIZATION IMPACT OF TRADE REFORMS IMPORT SUBSTITUTION IMPORT SUBSTITUTION INDUSTRIALIZATION IMPORTS INCOME INCOME CONVERGENCE INCREASE GROWTH INDEPENDENT VARIABLE INDEPENDENT VARIABLES INDUSTRIALIZATION INTERMEDIATE INPUTS INVESTMENT POLICY LABOR FORCE LONG-RUN GROWTH MACROECONOMIC POLICIES MARKET ECONOMY MARKET FAILURES MEASURE OF TRADE MONOPOLY NATIONAL INCOME NON-TARIFF BARRIERS OIL PRICES OPEN TRADE OPEN TRADE REGIME OPENNESS OUTPUT GROWTH PANEL REGRESSIONS PER CAPITA GROWTH POLICY CHANGES POLICY RESEARCH POLICY STANCE PRODUCTION FUNCTION PROTECTIONISM REAL EXCHANGE RATE SAVING RATE STATE POLICIES STRUCTURAL ADJUSTMENT STRUCTURAL ADJUSTMENT PROGRAMS STRUCTURAL ADJUSTMENT REFORMS SUB-SAHARAN AFRICA TARIFF BARRIERS TARIFF STRUCTURE TECHNOLOGICAL DEVELOPMENT TERMS OF TRADE TRADE ASSISTANCE TRADE BARRIERS TRADE FLOWS TRADE LIBERALIZATION TRADE OPENING TRADE OPENNESS TRADE POLICIES TRADE POLICY TRADE REFORM TRADE REFORMS TRADE REGIME TRADE REGIMES TRANSITION ECONOMIES VALUE ADDED WIDESPREAD CONSENSUS WTO
Online Access:	http://documents.worldbank.org/curated/en/2006/11/7186405/growth-before-after-trade-liberalization http://hdl.handle.net/10986/8864

id	okr-10986-8864
recordtype	oai_dc
spelling	okr-10986-88642021-04-23T14:02:41Z Growth Before and After Trade Liberalization Salinas, Gonzalo Aksoy, Ataman ABSOLUTE VALUE AGGREGATE INCOME ANNUAL GROWTH AVERAGE GROWTH AVERAGE TARIFFS BENEFITS OF TRADE CAPITAL ACCUMULATION CAPITAL INFLOWS CAPITAL INVESTMENT CONDITIONAL CONVERGENCE CONSTANT RETURNS TO SCALE CONVERGENCE HYPOTHESIS CURRENCY CURRENT ACCOUNT CURRENT ACCOUNT BALANCE DEBT DEPENDENT VARIABLE DEREGULATION DEVALUATION DEVELOPING COUNTRIES DEVELOPMENT INDICATORS ECONOMETRICS ECONOMIC CRISIS ECONOMIC GROWTH ECONOMIC IMPACT ECONOMIC PERFORMANCE ECONOMIC REFORM ECONOMIC STAGNATION ECONOMICS EDUCATIONAL ATTAINMENT EMPIRICAL GROWTH LITERATURE EMPIRICAL LITERATURE EMPIRICAL STUDIES ERROR TERM EXCHANGE RATE MISALIGNMENT EXPORT DIVERSIFICATION EXPORTS EXTERNAL DEBT EXTERNAL SHOCKS EXTERNALITIES FIXED EFFECTS FOREIGN CAPITAL FOREIGN DIRECT INVESTMENT FOREIGN EXCHANGE FREE TRADE GDP GDP PER CAPITA GROSS CAPITAL FORMATION GROSS DOMESTIC PRODUCT GROWTH DETERMINANTS GROWTH LITERATURE GROWTH MODEL GROWTH MODELS GROWTH PERFORMANCE GROWTH RATE GROWTH RATES GROWTH REGRESSIONS HIGH GROWTH HUMAN CAPITAL IMPACT OF TRADE IMPACT OF TRADE LIBERALIZATION IMPACT OF TRADE REFORMS IMPORT SUBSTITUTION IMPORT SUBSTITUTION INDUSTRIALIZATION IMPORTS INCOME INCOME CONVERGENCE INCREASE GROWTH INDEPENDENT VARIABLE INDEPENDENT VARIABLES INDUSTRIALIZATION INTERMEDIATE INPUTS INVESTMENT POLICY LABOR FORCE LONG-RUN GROWTH MACROECONOMIC POLICIES MARKET ECONOMY MARKET FAILURES MEASURE OF TRADE MONOPOLY NATIONAL INCOME NON-TARIFF BARRIERS OIL PRICES OPEN TRADE OPEN TRADE REGIME OPENNESS OUTPUT GROWTH PANEL REGRESSIONS PER CAPITA GROWTH POLICY CHANGES POLICY RESEARCH POLICY STANCE PRODUCTION FUNCTION PROTECTIONISM REAL EXCHANGE RATE SAVING RATE STATE POLICIES STRUCTURAL ADJUSTMENT STRUCTURAL ADJUSTMENT PROGRAMS STRUCTURAL ADJUSTMENT REFORMS SUB-SAHARAN AFRICA TARIFF BARRIERS TARIFF STRUCTURE TECHNOLOGICAL DEVELOPMENT TERMS OF TRADE TRADE ASSISTANCE TRADE BARRIERS TRADE FLOWS TRADE LIBERALIZATION TRADE OPENING TRADE OPENNESS TRADE POLICIES TRADE POLICY TRADE REFORM TRADE REFORMS TRADE REGIME TRADE REGIMES TRANSITION ECONOMIES VALUE ADDED WIDESPREAD CONSENSUS WTO The empirical study of the impact of trade liberalization has not convinced the skeptics about the economic gains after trade reforms. Some have even argued that trade reforms have led to economic collapse and to deindustrialization. Using a sample that excludes countries that were subject to major exogenous disruptions, the authors note that post-reform economic growth was 1.2 percentage points higher than before the reforms. This is remarkable considering that pre-reform periods were characterized by highly expansionary state policies and large external borrowing, and the crisis years that preceded trade liberalization in the comparisons are eliminated. Through multivariate fixed effects estimations the authors calculate that annual per capita GDP growth rates increased by up to 2.6 percentage points after the trade reforms, compared to a counterfactual that takes into consideration the evolution of several growth determinants. Moreover, trade liberalization has been followed by an acceleration of growth in investment, exports of goods and services, and manufacturing exports, and as opposed to common belief, outward orientation did not lead to significant deindustrialization and actually seems to have increased export diversification. Growth acceleration occurred irrespective of income per capita level and was quite significant in Sub-Saharan Africa. As expected, small countries benefited most from the reforms. 2012-06-22T20:23:56Z 2012-06-22T20:23:56Z 2006-11 http://documents.worldbank.org/curated/en/2006/11/7186405/growth-before-after-trade-liberalization http://hdl.handle.net/10986/8864 English en_US Policy Research Working Paper; No. 4062 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	ABSOLUTE VALUE AGGREGATE INCOME ANNUAL GROWTH AVERAGE GROWTH AVERAGE TARIFFS BENEFITS OF TRADE CAPITAL ACCUMULATION CAPITAL INFLOWS CAPITAL INVESTMENT CONDITIONAL CONVERGENCE CONSTANT RETURNS TO SCALE CONVERGENCE HYPOTHESIS CURRENCY CURRENT ACCOUNT CURRENT ACCOUNT BALANCE DEBT DEPENDENT VARIABLE DEREGULATION DEVALUATION DEVELOPING COUNTRIES DEVELOPMENT INDICATORS ECONOMETRICS ECONOMIC CRISIS ECONOMIC GROWTH ECONOMIC IMPACT ECONOMIC PERFORMANCE ECONOMIC REFORM ECONOMIC STAGNATION ECONOMICS EDUCATIONAL ATTAINMENT EMPIRICAL GROWTH LITERATURE EMPIRICAL LITERATURE EMPIRICAL STUDIES ERROR TERM EXCHANGE RATE MISALIGNMENT EXPORT DIVERSIFICATION EXPORTS EXTERNAL DEBT EXTERNAL SHOCKS EXTERNALITIES FIXED EFFECTS FOREIGN CAPITAL FOREIGN DIRECT INVESTMENT FOREIGN EXCHANGE FREE TRADE GDP GDP PER CAPITA GROSS CAPITAL FORMATION GROSS DOMESTIC PRODUCT GROWTH DETERMINANTS GROWTH LITERATURE GROWTH MODEL GROWTH MODELS GROWTH PERFORMANCE GROWTH RATE GROWTH RATES GROWTH REGRESSIONS HIGH GROWTH HUMAN CAPITAL IMPACT OF TRADE IMPACT OF TRADE LIBERALIZATION IMPACT OF TRADE REFORMS IMPORT SUBSTITUTION IMPORT SUBSTITUTION INDUSTRIALIZATION IMPORTS INCOME INCOME CONVERGENCE INCREASE GROWTH INDEPENDENT VARIABLE INDEPENDENT VARIABLES INDUSTRIALIZATION INTERMEDIATE INPUTS INVESTMENT POLICY LABOR FORCE LONG-RUN GROWTH MACROECONOMIC POLICIES MARKET ECONOMY MARKET FAILURES MEASURE OF TRADE MONOPOLY NATIONAL INCOME NON-TARIFF BARRIERS OIL PRICES OPEN TRADE OPEN TRADE REGIME OPENNESS OUTPUT GROWTH PANEL REGRESSIONS PER CAPITA GROWTH POLICY CHANGES POLICY RESEARCH POLICY STANCE PRODUCTION FUNCTION PROTECTIONISM REAL EXCHANGE RATE SAVING RATE STATE POLICIES STRUCTURAL ADJUSTMENT STRUCTURAL ADJUSTMENT PROGRAMS STRUCTURAL ADJUSTMENT REFORMS SUB-SAHARAN AFRICA TARIFF BARRIERS TARIFF STRUCTURE TECHNOLOGICAL DEVELOPMENT TERMS OF TRADE TRADE ASSISTANCE TRADE BARRIERS TRADE FLOWS TRADE LIBERALIZATION TRADE OPENING TRADE OPENNESS TRADE POLICIES TRADE POLICY TRADE REFORM TRADE REFORMS TRADE REGIME TRADE REGIMES TRANSITION ECONOMIES VALUE ADDED WIDESPREAD CONSENSUS WTO
spellingShingle	ABSOLUTE VALUE AGGREGATE INCOME ANNUAL GROWTH AVERAGE GROWTH AVERAGE TARIFFS BENEFITS OF TRADE CAPITAL ACCUMULATION CAPITAL INFLOWS CAPITAL INVESTMENT CONDITIONAL CONVERGENCE CONSTANT RETURNS TO SCALE CONVERGENCE HYPOTHESIS CURRENCY CURRENT ACCOUNT CURRENT ACCOUNT BALANCE DEBT DEPENDENT VARIABLE DEREGULATION DEVALUATION DEVELOPING COUNTRIES DEVELOPMENT INDICATORS ECONOMETRICS ECONOMIC CRISIS ECONOMIC GROWTH ECONOMIC IMPACT ECONOMIC PERFORMANCE ECONOMIC REFORM ECONOMIC STAGNATION ECONOMICS EDUCATIONAL ATTAINMENT EMPIRICAL GROWTH LITERATURE EMPIRICAL LITERATURE EMPIRICAL STUDIES ERROR TERM EXCHANGE RATE MISALIGNMENT EXPORT DIVERSIFICATION EXPORTS EXTERNAL DEBT EXTERNAL SHOCKS EXTERNALITIES FIXED EFFECTS FOREIGN CAPITAL FOREIGN DIRECT INVESTMENT FOREIGN EXCHANGE FREE TRADE GDP GDP PER CAPITA GROSS CAPITAL FORMATION GROSS DOMESTIC PRODUCT GROWTH DETERMINANTS GROWTH LITERATURE GROWTH MODEL GROWTH MODELS GROWTH PERFORMANCE GROWTH RATE GROWTH RATES GROWTH REGRESSIONS HIGH GROWTH HUMAN CAPITAL IMPACT OF TRADE IMPACT OF TRADE LIBERALIZATION IMPACT OF TRADE REFORMS IMPORT SUBSTITUTION IMPORT SUBSTITUTION INDUSTRIALIZATION IMPORTS INCOME INCOME CONVERGENCE INCREASE GROWTH INDEPENDENT VARIABLE INDEPENDENT VARIABLES INDUSTRIALIZATION INTERMEDIATE INPUTS INVESTMENT POLICY LABOR FORCE LONG-RUN GROWTH MACROECONOMIC POLICIES MARKET ECONOMY MARKET FAILURES MEASURE OF TRADE MONOPOLY NATIONAL INCOME NON-TARIFF BARRIERS OIL PRICES OPEN TRADE OPEN TRADE REGIME OPENNESS OUTPUT GROWTH PANEL REGRESSIONS PER CAPITA GROWTH POLICY CHANGES POLICY RESEARCH POLICY STANCE PRODUCTION FUNCTION PROTECTIONISM REAL EXCHANGE RATE SAVING RATE STATE POLICIES STRUCTURAL ADJUSTMENT STRUCTURAL ADJUSTMENT PROGRAMS STRUCTURAL ADJUSTMENT REFORMS SUB-SAHARAN AFRICA TARIFF BARRIERS TARIFF STRUCTURE TECHNOLOGICAL DEVELOPMENT TERMS OF TRADE TRADE ASSISTANCE TRADE BARRIERS TRADE FLOWS TRADE LIBERALIZATION TRADE OPENING TRADE OPENNESS TRADE POLICIES TRADE POLICY TRADE REFORM TRADE REFORMS TRADE REGIME TRADE REGIMES TRANSITION ECONOMIES VALUE ADDED WIDESPREAD CONSENSUS WTO Salinas, Gonzalo Aksoy, Ataman Growth Before and After Trade Liberalization
relation	Policy Research Working Paper; No. 4062
description	The empirical study of the impact of trade liberalization has not convinced the skeptics about the economic gains after trade reforms. Some have even argued that trade reforms have led to economic collapse and to deindustrialization. Using a sample that excludes countries that were subject to major exogenous disruptions, the authors note that post-reform economic growth was 1.2 percentage points higher than before the reforms. This is remarkable considering that pre-reform periods were characterized by highly expansionary state policies and large external borrowing, and the crisis years that preceded trade liberalization in the comparisons are eliminated. Through multivariate fixed effects estimations the authors calculate that annual per capita GDP growth rates increased by up to 2.6 percentage points after the trade reforms, compared to a counterfactual that takes into consideration the evolution of several growth determinants. Moreover, trade liberalization has been followed by an acceleration of growth in investment, exports of goods and services, and manufacturing exports, and as opposed to common belief, outward orientation did not lead to significant deindustrialization and actually seems to have increased export diversification. Growth acceleration occurred irrespective of income per capita level and was quite significant in Sub-Saharan Africa. As expected, small countries benefited most from the reforms.
format	Publications & Research :: Policy Research Working Paper
author	Salinas, Gonzalo Aksoy, Ataman
author_facet	Salinas, Gonzalo Aksoy, Ataman
author_sort	Salinas, Gonzalo
title	Growth Before and After Trade Liberalization
title_short	Growth Before and After Trade Liberalization
title_full	Growth Before and After Trade Liberalization
title_fullStr	Growth Before and After Trade Liberalization
title_full_unstemmed	Growth Before and After Trade Liberalization
title_sort	growth before and after trade liberalization
publisher	World Bank, Washington, DC
publishDate	2012
url	http://documents.worldbank.org/curated/en/2006/11/7186405/growth-before-after-trade-liberalization http://hdl.handle.net/10986/8864
_version_	1764406672092037120

Growth Before and After Trade Liberalization

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