Trade policies and growth in emerging economies: policy experiments

Seung Mo Choi, Hwagyun Kim, Xiaohan Ma

Research output: Contribution to journalArticlepeer-review

Abstract

This paper analyzes a dynamic endogenous growth model to quantify the channels through which international trade affects longer-term growth of an emerging economy, with an emphasis on the role played by trade policies. In the model, trade can promote (i) labor migration from agricultural to non-agricultural sectors and (ii) the inflow of foreign knowledge to enhance productivity in non-agricultural sector. The model is estimated to match with the data from selected advanced and emerging economies. Policy experiments suggest that openness to trade and elimination of trade barriers would raise annual real GDP growth by up to three percentage points for decades.

Original languageEnglish
JournalReview of World Economics
DOIs
StateAccepted/In press - 2021

Keywords

  • Growth
  • Knowledge spillover
  • Learning by doing
  • Structural transformation
  • Trade policies

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