Regional Trade Agreements Versus Broad Liberalization: Which Path Leads to Faster Growth? Time-Series Evidence

Author/Editor:

Athanasios Vamvakidis

Publication Date:

March 1, 1998

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

Should a closed economy open its trade to all countries or limit itself to participation in regional trade agreements (RTAs)? Based on time-series evidence for a data set for 1950-92, this paper estimates and compares the growth performance of countries that liberalized broadly and those that joined an RTA. The comparisons show that economies grew faster after broad liberalization, both in the short and long run, but slower after participation in an RTA. Economies also had higher investment shares after broad liberalization, but lower ones after joining an RTA. The policy implications support broad liberalization.

Series:

Working Paper No. 1998/040

Subject:

Econometric analysis International trade Logit models Population and demographics Population growth Trade barriers Trade liberalization Trade policy

Notes:

Also published in Staff Papers, Vol. 46, No. 1, March 1999.

English

Publication Date:

March 1, 1998

ISBN/ISSN:

9781451845945/1018-5941

Stock No:

WPIEA0401998

Pages:

34

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