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Trade Openness and Growth: Pursuing Empirical Glasnost
Author:
Mr. Andreas Billmeier null

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Tommaso Nannicini null

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Series:
IMF Working Papers
Volume/Issue:
Volume 2007: Issue 156
Language:
English
Publication Date:
01 Jul 2007
DOI:
https://doi.org/10.5089/9781451867206.001
ISBN:
9781451867206
ISSN:
1018-5941
Pages:
52
Keywords:
WP; control country; area dummy; country comparison; trade policy; trade openness; growth; matching estimators; synthetic control; country match; standard error; a lot of country; state monopoly; unobservable country heterogeneity; economic growth; MCD country; Latin American country; unobservable characteristic; Population growth; Trade liberalization; Public expenditure review; Middle East; Africa
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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Studies of the impact of trade openness on growth are based either on cross-country analysis-which lacks transparency-or case studies-which lack statistical rigor. We apply transparent econometric methods drawn from the treatment evaluation literature to make the comparison between treated (i.e., open) and control (i.e., closed) countries explicit while remaining within a unified statistical framework. First, matching estimators highlight the rather far-fetched country comparisons underlying common cross-country results. When appropriately restricting the sample, we confirm a positive and significant effect of openness on growth. Second, we apply synthetic control methods-which account for endogeneity due to unobservable heterogeneity-to countries that liberalized their trade regime and we show that trade liberalization has often had a positive effect on growth.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund