Working Paper: CEPR ID: DP1452
Authors: Joseph F. Francois; Hakan Nordstrom; Clinton R. Shiells
Abstract: This paper emphasizes the relevance of classical transition dynamics for trade policy, particularly for developing countries. The empirical evidence from cross-country growth regressions points to important transitional growth effects related to trade policy reforms. The paper employs a simple growth model to examine these effects, formally developing the transitional dynamics and contrasting policy reforms in countries near steady state (developed countries) with countries far from steady state (developing). Policy reforms that appear identical in a static or steady-state framework can have a substantially greater impact on developing countries, once transitional accumulation effects have been accounted for.
Keywords: trade; development; growth; investment
JEL Codes: F13; F43
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| trade policy reforms (F13) | transitional growth rates (O41) |
| initial conditions (C62) | impact of policy reforms (E69) |
| trade policy reforms (F13) | higher income levels sooner (J26) |
| transitional dynamics (C69) | accelerated growth (O40) |
| transitional growth path (O41) | realized higher income levels (D31) |