Working Paper: CEPR ID: DP2143
Authors: Francisco RodrÃguez; Dani Rodrik
Abstract: 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.
Keywords: trade policy; economic growth
JEL Codes: F13; O57
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| trade policy (F13) | economic growth (O49) |
| trade openness (F43) | economic growth (O49) |
| trade barriers (F14) | economic performance indicators (P47) |
| indicators of openness (O36) | other determinants of poor economic performance (P47) |