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How Much Do Trading Partners Matter for Economic Growth? Vivek Arora and Athanasios Vamvakidis Full Text of this Article (PDF 96K) Abstract: This paper empirically
examines the extent to which a country’s economic growth is influenced
by the economies of its trading partners. Panel estimation results based
on four decades of data for more than 100 countries show that trading
partners’ growth has a strong effect on domestic growth, even after controlling
for the influence of common global and regional trends. The results are
robust to instrumental variable estimation and other robustness tests.
Trading partners’ relative income levels are also positively correlated
with growth, suggesting that the richer a country’s trading partners,
the stronger is conditional convergence. A general implication of the
results is that countries benefit from trading with fast-growing and relatively
more developed countries. |
