NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Trade Policy and Economic Growth: A Skeptic's Guide to Cross-National Evidence

Francisco Rodriguez, Dani Rodrik

NBER Working Paper No. 7081
Issued in April 1999
NBER Program(s):   ITI

Do countries with lower policy-induced barriers to international trade grow faster, once other relevant country characteristics are controlled for? There exists a large empirical literature providing an affirmative answer to this question. We argue that methodological problems with the empirical strategies employed in this literature leave the results open to diverse interpretations. In many cases, the indicators of openness' used by researchers are poor measures of trade barriers or are highly correlated with other sources of bad economic performance. In other cases, the methods used to ascertain the link between trade policy and growth have serious shortcomings. Papers that we review include Dollar (1992), Ben-David (1993), Sachs and Warner (1995), and Edwards (1998). We find little evidence that open trade policies--in the sense of lower tariff and non-tariff barriers to trade--are significantly associated with economic growth.

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Document Object Identifier (DOI): 10.3386/w7081

Published: Bernanke, Ben and Kenneth S. Rogoff (eds.) NBER Macroeconomics Annual 2000, Volume 15. Cambrodge, MA: The MIT Press, 2001.

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