Does International Trade Raise Income? Early Studies, Critiques, and Innovations

Akira Sasahara

No DP2026-003, Keio-IES Discussion Paper Series from Institute for Economics Studies, Keio University

Abstract: This article provides an overview of the literature examining the effects of international trade on countries’ average income levels. It reviews the seminal study by Frankel and Romer (1999), which uses geography as an instrumental variable to identify the causal effects of trade on income in a cross-country setting. It also discusses studies by Felbermayr and Gröschl (2013), Feyrer (2019), and Feyrer (2021), which exploit time-varying geographic shocks—natural disasters, air transport, and a canal closure, respectively—to identify the causal effects of trade on income in panel data. Along the way, this article discusses key empirical challenges and the methodological advances developed to address them. It concludes that the widely accepted answer to the question “Does trade raise income levels?†is “Yes,†at least for the period from the 1950s to the 2000s.

Keywords: International trade; income levels; empirical analysis (search for similar items in EconPapers)
JEL-codes: F14 F43 O47 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2026-02-20
New Economics Papers: this item is included in nep-his, nep-int and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://ies.keio.ac.jp/upload/DP2026-003_EN.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:keo:dpaper:dp2026-003

Access Statistics for this paper

More papers in Keio-IES Discussion Paper Series from Institute for Economics Studies, Keio University Contact information at EDIRC.
Bibliographic data for series maintained by Institute for Economics Studies, Keio University ().