Multilateral Trade Liberalization and Economic Growth

Gnangnon, Sèna Kimm

doi:10.11130/jei.2018.33.2.1261

Cited by 39 publications

(32 citation statements)

References 43 publications

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“…Following recent literature (e.g., Ratnaike 2012and Gnangnon 2017a, 2017b, 2017c, 2017d, 2017f, 2018aand 2018b, this study computes the indicator of multilateral trade policy. In particular, MTP is computed for a given country as the average trade freedom score of the rest of the world, that is, for all the other countries (except for the concerned country) for which data exist.…”

Section: Measure Of Trade Policy Spacementioning

confidence: 99%

Trade Policy Space, Economic Growth, and Transitional Convergence in terms of Economic Development

Gnangnon

2019

Journal of Economic Integration

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The present study proposes a quantitative measure of the concept of trade policy space and investigates its impact on countries' economic growth and transitional convergence in terms of economic development. In this study, trade policy space is considered as the room for maneuver available to a government once its current trade policy departs from the structural domestic and international factors that could influence the trade policy. The transitional convergence is defined as the catch up of a country's real per capita income with the world's average real per capita income.The empirical analysis covering 150 countries from 1995 to 2015 shows that although the trade policy space exerts a positive impact on economic growth, this positive effect depends on countries' structural policies. Furthermore, the study results indicate that the trade policy space exerts a positive and significant effect on transitional convergence, and the greater the trade policy space, the higher is the transitional convergence. JEL Classifications: F13, F14, F63, O40 jei 2 1 According to UNCTAD (2014: Chapter V), North-South Agreements contain a larger number of both WTO-plus and WTO-extra provisions than either North-North or South-South Agreements. These provisions cover coopetition policy, investment and capital movement, government procurement, labor mobility and environmental standards. UNECA (2016) has provided concrete examples on how RTAs such as Economic Partnership Agreements could restrict more policy space than WTO rules. jei 3 trade regime. It's a recent report by UNECA (2015: Chapter 5, p157) stressed that the main concern for Africa in terms of policy space relates to RTAs, which might further limit policy options for industrialization. As several African countries are least developed countries (LDCs), which are favorably treated under the WTO rules, the UNECA report has concluded that the loss of policy space for African economies has so far been relatively insignificant.Van der Ven (2017, p75) debated that the complexity of WTO rules and their economic effect may lead a country, in good faith, to adopt policies that are inconsistent with WTO rules. Based on case studies from three non-LDCs African countries (Ghana, Kenya, and Namibia) on industrial policy priorities and key trade and investment laws and regulation, she concluded that Africa's industrialization is not genuinely restricted by the shrinking of the WTO policy space. Thus, from her perspective, a key impediment to the implementation of industrial policy objectives in Africa was the lack of policy alignment and understanding of the WTO policy space. The Overseas Development Institute (ODI 2007) argues that there are benefits that can be derived precisely from the restriction of trade policy space arising from the constraints imposed by international rules, including international trade obligations. The underlying rationale is that international regulations provide an international commitment (lock in), which is more stable than domestic regulation.While sever...

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Section: Measure Of Trade Policy Spacementioning

confidence: 99%

Trade Policy Space, Economic Growth, and Transitional Convergence in terms of Economic Development

Gnangnon

2019

Journal of Economic Integration

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“…His results show that trade reforms that significantly reduce import tariffs have a positive impact on economic growth. Moreover, Gnangnon (2018) examines the impact of multilateral trade liberalization on the economic growth rate by using an unbalanced panel dataset comprising 150 countries over the period 1995-2015. The results of the paper suggest a strong positive impact of multilateral trade liberalization on economic growth.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Another point is that the protectionism in international trade and trade wars (sometimes through exchange rates wars) have been growing more popular in the recent years where the USA has been the leader of this new era. As Gnangnon (2018) argues, the world has experienced a backlash against free trade over the last years. This period can be described as the rising of the protectionism.…”

Section: Introductionmentioning

confidence: 99%

Trade Liberalization: Is It Desirable for All Developing Economies?: A Literature Review

Bilgin¹

2019

RWE

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Economic theory says all countries benefit from free international trade. However, does this belief tell the whole story? Can all countries indeed benefit from free trade? For instance, is it any good for developing countries? In the literature, there are many studies and some of them present ideas against free trade. In this paper, we strive to provide a brief of the literature on developing economies.Another paper (Dean, 1995) studies the dramatic shift from protectionism toward free trade in the 1980s. During the 1980s, increasing numbers of developing countries liberalized their trade regimes (Dean, 1995). The main reason behind the liberalization story of developing countries was to take full advantage of the opportunities for development through trade. In this framework, South Asia, Latin America, and East Asia have implemented extensive reforms, yet each region has shown a distinct difference in approach and the degree of liberalization achieved. Dean (1995) argues Latin America stands out as moving sharply toward the level of openness of the East Asian Newly Industrialized Countries. However, there is little progress toward free trade in Africa. As a result, over the past 20 years, the growth of world trade has averaged 6 percent per year, twice as fast as the world output.Despite two decades of trade liberalization, the level of the tariffs remains at a high level in many countries; most countries also have imposed some non-tariff barriers. Besides, trade barriers in industrial countries are concentrated in the agricultural and labor-intensive sectors in which developing countries have a comparative advantage. The developing countries' economies are characterized by heavy dependence on agriculture and labor-intensive sectors. Additionally, developing countries impose tariffs on imports from each other that are as high as those they impose on On the other hand, Chikhuri (2014) investigates the agricultural sector role in the African economic development process. The author uses panel data analysis to examine the long-run structural relationships between agricultural trade liberalization and economic growth. The results of the paper support the claim that agricultural growth through

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“…While it is not easy to define multilateral trade liberalisation, the current analysis follows a number of recent studies (e.g. Gnangnon ,b,c,d,e,f; ,b) and defines the concept of ‘multilateral trade policy liberalisation’ as all trade‐related decisions – including those adopted under the auspices of the WTO – that ultimately contribute to reducing tariffs and non‐tariff barriers to trade for all countries, or at least the overwhelming majority of them. For example, decisions or agreements (such as the 2013 Trade Facilitation Agreement) adopted by WTO trade ministers at WTO ministerial conferences apply to all WTO members and contribute directly to the liberalisation of trade at the multilateral level.…”

Section: The Theoretical Effect Of Multilateral Trade Liberalisation mentioning

confidence: 99%

“…Before presenting the model that would help examine the effect of multilateral trade liberalisation on financial liberalisation, it is useful to discuss the measurement of the indicator of multilateral trade liberalisation. Following Ratnaike () and Gnangnon (,b,c,d,e; ,b), two criteria are used to choose the appropriate indicator of domestic trade policy that would help calculate the index of multilateral trade policy. First, the indicator of domestic trade policy should reflect the multiple facets of trade policy, which encompasses both tariff and non‐tariff measures.…”

Section: Model Specificationmentioning

confidence: 99%

Multilateral Trade Liberalisation and Financial Openness

Gnangnon

2018

Economic Affairs

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This article examines the effect of multilateral trade liberalisation (MTP) on financial openness (capital account openness). Results show that MTP induces higher financial openness in low‐income countries (LICs) and old industrialised countries. For other subsamples, the effect is negative and could be explained by the fact that countries that lack the requisite institutions and financial systems to derive full benefits from higher financial openness would likely limit their capital account openness while trying to maximise their benefits from opportunities offered by greater MTP. Greater multilateral cooperation on trade matters would be particularly beneficial to LICs.

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Multilateral Trade Liberalization and Economic Growth

Cited by 39 publications

References 43 publications

Trade Policy Space, Economic Growth, and Transitional Convergence in terms of Economic Development

Trade Policy Space, Economic Growth, and Transitional Convergence in terms of Economic Development

Trade Liberalization: Is It Desirable for All Developing Economies?: A Literature Review

Multilateral Trade Liberalisation and Financial Openness

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