## The Impact of Trade Liberalization on the Trade Balance in Developing Countries

_IMF Working Papers, January 1, 2008_

## Source details

**Canonical URL:** [The Impact of Trade Liberalization on the Trade Balance in Developing Countries](https://www.imf.org/en/publications/wp/issues/2016/12/31/the-impact-of-trade-liberalization-on-the-trade-balance-in-developing-countries-21596)

## Other formats

- [Markdown version](/en/publications/wp/issues/2016/12/31/the-impact-of-trade-liberalization-on-the-trade-balance-in-developing-countries-21596/index.md)
- [Structured JSON version](/en/publications/wp/issues/2016/12/31/the-impact-of-trade-liberalization-on-the-trade-balance-in-developing-countries-21596/index.json)
- [Bundle manifest](/en/publications/wp/issues/2016/12/31/the-impact-of-trade-liberalization-on-the-trade-balance-in-developing-countries-21596/bundle-manifest.json)

## Bibliographic details
- Authors: Yi Wu, Li Zeng
- Published: January 1, 2008
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451868760.001

---

### Summary findings
- Using two recently constructed measures of trade liberalization dates, the research studies the impact of trade liberalization on imports, exports, and overall trade balance for a large sample of developing countries.
- Strong and consistent evidence that trade liberalization leads to higher imports and higher exports.
- Mixed evidence on the impact of liberalization on the overall trade balance:
  - Using the first measure of liberalization dates (which extends Li (2004)), little evidence of a statistically significant negative impact on the overall trade balance.
  - Using the second measure of liberalization dates (compiled by Wacziarg and Welch (2003)), some evidence that liberalization worsens the trade balance, but:
    - The evidence is not robust across different estimation specifications.
    - The estimated impact is smaller than that reported by Santos-Paulino and Thirwall (2004).

### Measures and methodology
- Two measures of trade liberalization dates are employed:
  - First measure: extends Li (2004).
  - Second measure: compiled by Wacziarg and Welch (2003).
- Estimation results vary by specification, producing robust results for imports and exports but mixed results for the overall trade balance.

---

## Content in this bundle

- **_wp0814**
  - [_wp0814 (Markdown version)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2008/_wp0814.pdf.md){rel="alternate" type="text/markdown"}
  - [_wp0814 (PDF)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2008/_wp0814.pdf){rel="external" type="application/pdf"}

---

_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/the-impact-of-trade-liberalization-on-the-trade-balance-in-developing-countries-21596_