Working Paper: NBER ID: w13048
Authors: John Romalis
Abstract: This paper identifies a causal effect of openness to international trade on growth. It does so by using tariff barriers of the United States as instruments for the openness of developing countries. Trade liberalization by a large trading partner causes an expansion in the trade of other countries. Trade expansion induced by greater market access appears to cause a quantitatively large acceleration in the growth rates of developing countries. Eliminating existing developed world tariffs would increase developing country trade to GDP ratios by one third and growth rates by 0.6 to 1.6 percent per annum.
Keywords: Market Access; Openness; Growth; Trade Liberalization
JEL Codes: F13; F43
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| U.S. MFN tariffs (F13) | trade openness of developing countries (F43) |
| trade openness of developing countries (F43) | trade expansion of developing countries (F10) |
| trade expansion of developing countries (F10) | growth rates of developing countries (O57) |
| U.S. MFN tariffs (F13) | growth rates of developing countries (O57) |
| trade openness of developing countries (F43) | trade-to-GDP ratios of developing countries (F14) |
| trade-to-GDP ratios of developing countries (F14) | growth rates of developing countries (O57) |