NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Incremental Trade and Endogenous Growth: A q-Theory Approach

Richard E. Baldwin, Rikard Forslid

NBER Working Paper No. 6477
Issued in March 1998
NBER Program(s):   ITI

Most trade-and-growth studies focus on the growth effects of autarky-to-free-trade changes, rather than those of incremental liberalizations. This paper characterizes how the strength and sign of openness-and-growth links depend upon the nature and level of trade barriers. For most types of trade barriers, we find that liberalization raises or lowers growth depending upon the initial level of the barrier. This suggests empirical studies that pool data from high and low protection nations are mis-specified, and that policy lessons based on autarky-to-free-trade results are of limited use to policymakers.

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Document Object Identifier (DOI): 10.3386/w6477

Published: Baldwin, Richard E. and Rikard Forslid. "Incremental Trade Policy And Endogenous Growth," Journal of Economic Dynamics and Control, 1999, v23(5-6,Apr), 797-822.

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