Openness, Outward Orientation, Trade Liberalization and Economic Performance in Developing Countries

Sebastian Edwards

NBER Working Paper No. 2908
Issued in March 1989
NBER Program(s):   ITI   IFM

This paper deals with the role of trade regimes in determining economic performance and growth in the developing countries. The policy and empirical literatures on trade orientation and economic growth are critically reviewed; it is argued that a key limitation of these works has been the inability to create measures of trade orientation that are: (i) objective; (ii) continuous and (iii) comparable across countries. A growth model that relates trade orientation to the ability to absorb technological progress from the rest of the world is developed for the case of a small country. The model is tested using a new index of trade orientation that is free from the limitations described above. The results obtained using a cross country data set provide strong support to the hypothesis that, with other things given, countries with a less distorted external sector grow faster than those countries with a more distorted external sector. The new theories of economic growth are also discussed, and their usefulness for analyzing the relation between trade orientation and growth in the developing countries is assessed.

download in pdf format
   (483 K)

email paper

This paper is available as PDF (483 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w2908

Published: "Openess, Trade Liberalization, and Growth in Developing Countries", Journal of Economic Literature, 1993, V31(3), 1358-1393

Users who downloaded this paper also downloaded these:
Goldberg and Pavcnik w10593 Trade, Inequality, and Poverty: What Do We Know? Evidence from Recent Trade Liberalization Episodes in Developing Countries
Edwards w5978 Openness, Productivity and Growth: What Do We Really Know?
Edwards w3716 Trade Orientation, Distortions and Growth in Developing Countries
Rodriguez and Rodrik Trade Policy and Economic Growth: A Skeptic's Guide to the Cross-National Evidence
Wacziarg and Horn Welch w10152 Trade Liberalization and Growth: New Evidence
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us