Economies in Transition: How Important Is Trade Openness for Growth?*

Nannicini, Tommaso; Billmeier, Andreas

doi:10.1111/j.1468-0084.2010.00626.x

Cited by 77 publications

(43 citation statements)

References 58 publications

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“…And in fact, the links between these two variables have been blurred by various factors (see Nannicini and Billmeier, 2011). Studies such as Dollar (1992), Sachs and Warner (1995), Edwards (1992Edwards ( , 1998, and Vamvakidis (2002) document evidence in favour of a positive effect of trade openness on growth; while Alcalá and Ciccone (2004) demonstrate that the effects work primarily through total factor productivity.…”

Section: Related Literaturementioning

confidence: 99%

“…Our paper is loosely related to that of Harrison (1996) in that we attempt to answer the above question by using fixed-effects estimators, which improves upon the parameter estimates of cross-country regressions. The paper is also loosely related to Nannicini and Billmeier (2011) because we closely consider a panel of relatively homogenous countries -the Central and Eastern European (CEE) countries -thereby surmounting the cross-country heterogeneity problem associated with cross-country regressions. These countries are relatively homogenous in that they are located in the same hemisphere and have relatively similar or the same institutional setups, political history, economic background, and initial endowments.…”

Section: Review Of Economic Perspectivesmentioning

confidence: 99%

“…There are some existing studies which considered these countries in their samples as well. For example, Nannicini and Billmeier (2011), studying transition countries, including the CEE countries, find trade liberalization to exert a positive impact on growth. Awokuse (2007) finds trade to stimulate growth in the CEE countries in his sample.…”

Section: Review Of Economic Perspectivesmentioning

confidence: 99%

“…Generally, two sets of measures have emerged in the literature. These are policy stance and trade outcome measures (see Nannicini and Billmeier, 2011;Squalli and Wilson, 2011). The former considers the nature of trade policies, thereby leading to binary indicators denoting closed or opened economies; and the latter expresses the size of countries' international transactions, normally expressed in terms of GDP.…”

Section: Related Literaturementioning

confidence: 99%

“…almost all countries with certain characteristics are either open or closed), then the evidence based on cross-country estimations would not be reliable. Nannicini and Billmeier (2011) revisit the trade-growth nexus by closely looking at a panel of transition economies. They control for treatment endogeneity using synthetic control methods and find trade openness to promote growth.…”

Section: Review Of Economic Perspectivesmentioning

confidence: 99%

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Does Trade Openness Matter for Economic Growth in the CEE Countries?

Iyke

2017

Review of Economic Perspectives

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This paper sets out to answer the question: Is trade openness important for economic growth in the Central and Eastern European (CEE) countries? The policyoriented measures of trade openness used in earlier studies have been argued to be subjective, while the simple outcome-oriented measures only capture one aspect of trade openness, namely: countries' share of trade. Hence, following Squalli and Wilson (2011), the paper constructs a new outcome-oriented measure of trade openness which captures a country's share of trade, and its interaction and interconnectedness with the rest of the world. Using fixed-effects regressions for 17 CEE countries over the period 1994 -2014, the paper finds trade openness to be important for growth within the CEE countries. In particular, the results show that increases in trade openness is associated with increases in real GDP per capita growth within these countries. The results appear significantly the same after we dropped Croatia and Estonia -two historically closed economies.

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Section: Related Literaturementioning

confidence: 99%

Section: Review Of Economic Perspectivesmentioning

confidence: 99%

Section: Review Of Economic Perspectivesmentioning

confidence: 99%

Section: Related Literaturementioning

confidence: 99%

Section: Review Of Economic Perspectivesmentioning

confidence: 99%

See 3 more Smart Citations

Does Trade Openness Matter for Economic Growth in the CEE Countries?

Iyke

2017

Review of Economic Perspectives

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The effect of integration processes of the Common Market for Eastern and Southern Africa on the economic growth of the member states

et al. 2021

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This study aims to identify the significant effects of the Common Market for Eastern and Southern Africa (COMESA) integration processes on the economic growth of the member states over the period 2004–2016. By applying the system generalized method of moments (GMM) technique, the results show that the gross domestic product (GDP) per capita, with a 1‐year lag, has a robust effect on economic growth. Both per capita domestic value‐added (PCDVA) and institutional quality (IQ) exhibit a positive impact on economic growth in the long‐run performance compared to the short‐run performance. Human capital (HC) suggests statistical significance and adverse impact on economic growth in the short and long runs. However, our key variable of interest, namely the regional integration dummy variable (free trade area, FTA), has no robust effect on economic growth and exhibits insignificant effects across all interaction models and shows “inverted‐U interaction relationships” with trade openness, intra‐community export, and PCDVA. Other regional economic communities shows a statistically significant negative effect on the GDP per capita in both the short and long runs as well as in its interactions with FTA. The study suggests, among others, that there is a need for COMESA to address the issue of overlapping membership and to promote appropriate PCDVA, IQ, financial development, and HC policies and strategies to boost the economic growth of the member states.

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Openness and growth: Is the relationship non‐linear?

2021

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Using an augmented two‐sector endogenous growth model for a small, open economy characterized by human capital accumulation and productive government expenditure, we analyse the nature of the relationship between openness and growth. External openness enters the human capital accumulation function directly. Productive government expenditure affects human capital accumulation, relying on seigniorage revenue as finance where seigniorage is itself dependent on the level of openness. The findings indicate two, opposing effects of openness on growth ‐ a direct effect of openness on growth through knowledge spillovers that affect human capital accumulation, and an indirect effect of decreasing seigniorage revenue on growth through decreasing productive government expenditure on human capital. We discuss conditions under which the openness‐growth curve can be concave/convex, without specifying theoretical functional forms or values to unknown parameters in the model to provide concise theoretical results. Rather, drawing samples of exact model‐match countries over 1980–2011, we rely on a semi‐parametric, data‐driven empirical approach to provide empirical impetus to the theoretical outcomes reported. We show the relationship between openness and growth is non‐linear. Specifically, inverted U–shaped. The result suggests that openness only have a positive impact on the growth‐rate until a certain threshold‐level, thereafter, the effect is negative.

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Economies in Transition: How Important Is Trade Openness for Growth?*

Cited by 77 publications

References 58 publications

Does Trade Openness Matter for Economic Growth in the CEE Countries?

Does Trade Openness Matter for Economic Growth in the CEE Countries?

The effect of integration processes of the Common Market for Eastern and Southern Africa on the economic growth of the member states

Openness and growth: Is the relationship non‐linear?

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