NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Trade Orientation, Distortions and Growth in Developing Countries

Sebastian Edwards

NBER Working Paper No. 3716
Issued in May 1991
NBER Program(s):   ITI   IFM

In this paper I use a cross country data set to analyze the relationship between trade orientation, trade distortions and growth. I first develop a simple endogenous growth model that emphasizes the process of technological absorption in small developing countries. According to this model countries that liberalize their international trade and become more open will tend to grow faster. Whether this higher growth is permanent, or only a short run result, will depend on the relative size of some key parameters. using nine alternative indicators of trade orientation I find out that the data supports the view that more open economies tend to grow faster than economies with trade distortions. The results are robust to the method of estimation, to correction for errors in variables and for the deletion of outliers. I finally argue that future research in the area should move towards the empirical investigation of the microeconomics of technological innovations and growth.

download in pdf format
   (334 K)

download in djvu format
   (254 K)

email paper

This paper is available as PDF (334 K) or DjVu (254 K) (Download viewer) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w3716

Published:

  • "The Political Economy of Inflation and Stabilization in Developing Countries," Economic Development and Cultural Change, January 1994, 42(2): 235-266 ,
  • "Interest Rate Determination in Developing Countries: A Conceptual Framework," IMF Staff Papers, September 1985, 32(3): 377-403 ,
  • with Peter J. Montiel, "Devaluation Crises and the Macroeconomic Consequences of Postponed Adjustment in Developing Countries," IMF Staff Papers, December 1989, 36(4): 875-903 ,
  • "Explaining Fiscal Policies and Inflation in Developing Countries," Journal of International Money and Finance, March 1991, vol. 10 (supp. 1): S16-S48 ,
  • "Openness,Trade Liberalization, and Growth in Developing Countries," Journal of Economic Literature, September 1993, 31(3): 1358-1393 ,
  • Edwards, Sebastian, 1992. "Trade orientation, distortions and growth in developing countries," Journal of Development Economics, Elsevier, vol. 39(1), pages 31-57, July.

Users who downloaded this paper also downloaded these:
Edwards w2908 Openness, Outward Orientation, Trade Liberalization and Economic Performance in Developing Countries
Rodriguez and Rodrik Trade Policy and Economic Growth: A Skeptic's Guide to the Cross-National Evidence
Edwards w5978 Openness, Productivity and Growth: What Do We Really Know?
Rodriguez and Rodrik w7081 Trade Policy and Economic Growth: A Skeptic's Guide to Cross-National Evidence
Harrison w5221 Openness and Growth: A Time-Series, Cross-Country Analysis for Developing Countries
 
Publications
Activities
Meetings
Data
People
About

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

Contact Us