Trade Openness and Growth: Pursuing Empirical Glasnost
IMF Working Papers, July 1, 2007
Source details
- Canonical URL
- Trade Openness and Growth: Pursuing Empirical Glasnost
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Bibliographic details
- Authors: Andreas Billmeier, Tommaso Nannicini
- Published: July 1, 2007
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451867206.001
Research objective and methods
- Objective: Assess the impact of trade openness on economic growth using transparent econometric methods drawn from the treatment evaluation literature.
- Methods applied:
- Matching estimators to compare treated (open) and control (closed) countries within a unified statistical framework.
- Synthetic control methods to account for endogeneity due to unobservable heterogeneity and evaluate countries that liberalized their trade regime.
Key findings
- Matching estimators:
- Highlight "rather far-fetched country comparisons" underlying common cross-country results.
- When the sample is appropriately restricted, the analysis "confirm[s] a positive and significant effect of openness on growth."
- Synthetic control methods:
- Show that trade liberalization has "often had a positive effect on growth."
- Overall conclusion: Using transparent, treatment-evaluation methods strengthens evidence that trade openness and trade liberalization can positively affect economic growth, while underscoring the importance of careful comparison groups and addressing unobservable heterogeneity.
Subjects and keywords (as listed)
- Subjects: Cross country analysis, Education, Expenditure, International trade, Population and demographics, Population growth, Public expenditure review, Trade liberalization
- Keywords: a lot of country, Africa, area dummy, control country, country comparison, country match, economic growth, growth, Latin American country, matching estimators, MCD country, Middle East, Population growth, Public expenditure review, standard error, state monopoly, synthetic control, Trade liberalization, trade openness, trade policy, unobservable characteristic, unobservable country heterogeneity, WP