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The empirics of trade and growth: where are the policy recommendations? - Klaus Wälde and Christina Wood
Author(s): Klaus Wälde (Directorate-General for Economic and Financial Affairs) and Christina Wood (The World Bank)
The empirics of trade and growth: where are the policy recommendations? - Klaus Wälde and Christina Wood (390 kB)
Existing literature repeatedly documented a strong correlation between trade and growth. It has also shown a causal effect of imports (though not necessarily exports) on growth in simultaneous equation models but to a lesser extent in Granger-causality tests. Export and import taxes have sometimes been found to negatively affect growth.
Drawing policy conclusions from these general findings for a particular country is difficult not only because of the contradictory results but also because of potential second best world effects and the implied endogeneity of trade policy. Policy recommendations for a specific country require a careful analysis of market and institutional arrangements and can not be based on the existing cross-country literature.
(European Economy. Economic Papers 204. May 2004.
Brussels. 19pp. Tab. Free.)
|ISBN 92-894-5969-7 (online)||
|ISSN 1016-8060 (online)