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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 pdf (390 kB) Choose translations of the previous link 

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.)

KC-AI-04-204-EN- (online)
ISBN 92-894-5969-7 (online)
ISSN 1016-8060 (online)

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