Trade openness reduces growth volatility when countries are well diversified

Mona E. Haddad, Jamus Lim and Christian Saborowski

No 5222, Policy Research Working Paper Series from The World Bank

Abstract: This paper addresses the mechanisms by which trade openness affects growth volatility. Using a diverse set of export diversification indicators, it presents strong evidence pointing to an important role for export diversification in reducing the effect of trade openness on growth volatility. The authors also identify positive thresholds for product diversification at which the effect of openness on volatility changes sign. The effect is shown to be positive only for a minority of countries with highly concentrated export baskets. This result is shown to be robust to both explicit accounting for endogeneity as well as the inclusion of a host of additional controls.

Keywords: Economic Conditions and Volatility; Achieving Shared Growth; Markets and Market Access; Free Trade; Emerging Markets (search for similar items in EconPapers)
Date: 2010-02-01
New Economics Papers: this item is included in nep-dev and nep-int
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Citations: View citations in EconPapers (38)

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Related works:
Journal Article: Trade openness reduces growth volatility when countries are well diversified (2013)
Journal Article: Trade openness reduces growth volatility when countries are well diversified (2013)
Working Paper: Trade openness reduces growth volatility when countries are well diversified (2012)
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