 TRADE OPENNESS: AN AUSTRALIAN PERSPECTIVESimon Guttmann and Anthony Richards Australian Economic Papers, 2006, vol. 45, issue 3, 188-203 Abstract: Australia's external trade is relatively low compared with the size of its economy. Indeed, Australia's openness ratio (exports plus imports as a proportion of GDP) in 2002 was the third‐lowest among the 30 OECD countries. This paper seeks to understand Australia's low openness by analysing the empirical determinants of aggregate country trade. We present an equation for country openness which explains a substantial amount of the cross‐country variation. The most important explanators of openness are population and a measure of distance to potential trade partners. Countries with larger populations trade less, as do countries that are relatively more remote. Furthermore, after controlling for trade policy there is little evidence of a positive correlation between openness and economic development. The openness equation suggests that Australia's level of trade is relatively close to what would be expected. The most important factors in explaining Australia's low openness ratio are its large geographic size and distance to the rest of the world. Date: 2006 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:ausecp:v:45:y:2006:i:3:p:188-203 Ordering information: This journal article can be ordered from Access Statistics for this article Australian Economic Papers is currently edited by Daniel Leonard More articles in Australian Economic Papers from Wiley Blackwell |
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