From Groundnuts to Globalization: A Structural Estimate of Trade and Growth

Christian Broda, Joshua Greenfield and David Weinstein

No 12512, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Starting with Romer [1987] and Rivera-Batiz-Romer [1991] economists have been able to model how trade enhances growth through the creation and import of new varieties. In this framework, international trade increases economic output through two channels. First, trade raises productivity levels because producers gain access to new imported varieties. Second, increases in the number of varieties drives down the cost of innovation and results in ever more variety creation. Using highly disaggregate trade data, e.g. Gabon's imports of Gambian groundnuts, we structurally estimate the impact that new imports have had in approximately 4000 markets per country. We then move from groundnuts to globalization by building an exact TFP index that aggregates these micro gains to obtain an estimate of trade on productivity growth for each country. We find that in the typical country in the world, new imported varieties account for 15 percent of its productivity growth. These effects are larger in developing countries where the median impact of new imported varieties equals a quarter of national productivity growth.

JEL-codes: E00 F43 O4 (search for similar items in EconPapers)
Date: 2006-09
New Economics Papers: this item is included in nep-dev, nep-eff, nep-int and nep-mac
Note: ITI
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (291)

Published as Christian Broda & Joshua Greenfield & David E. Weinstein, 2017. "From Groundnuts to Globalization: A Structural Estimate of Trade and Growth," Research in Economics, .

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