The Network Origins of Economic Growth

Georg Dürnecker, Moritz Meyer and Fernando Vega-Redondo
Authors registered in the RePEc Author Service: Georg Duernecker

No 14-06, Working Papers from University of Mannheim, Department of Economics

Abstract: In this paper, we propose a new approach to represent a country's outward orientation. Prior work mostly uses indicators of aggregate trade intensity, trade policy or trade restrictiveness. Our approach offers a broader perspective as it measures a country's level of integration not only by its set of direct trade connections with the rest of the world but also through the full architecture of its second, third, and all other higher-order connections. We apply our methodology to a sample of 167 countries spanning the period from 1962 to 2009 and perform a Bayesian modelaveraging analysis on the determinants of growth. We find a prominent positive effect of integration on a country's level of per capita income, while the aforementioned traditional measures of outward orientation display only a secondary, largely insignificant, weight. This, we argue, highlights the network basis of economic growth and adds a novel perspective to the notion of economic openness. We also perform several sensitivity checks and conclude that our baseline findings are extremely robust to different data input and alternative assumptions about the computation of country integration.

Keywords: Globalization; Trade Integration; Economic Growth; Network Analysis; Dynamic Panel Model; Bayesian Model Averaging (search for similar items in EconPapers)
JEL-codes: C11 D85 F15 F63 O40 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-fdg, nep-gro, nep-int and nep-net
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:mnh:wpaper:35483

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