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Trade Policy, Foreign Direct Investment, and Convergence

Kyriaki Silvestriadou and Vudayagiri Balasubramanyam

Review of Development Economics, 2000, vol. 4, issue 3, 279-91

Abstract: This paper examines the hypothesis that countries which pursue export-promoting (EP) policies are much more likely to converge than countries which pursue import-substituting (IS) policies. The hypothesis is tested statistically in the context of a sample of developing countries that have in the recent past pursued inward-looking or outward-looking or export-promotion (EP) policies. The empirical evidence supports the hypothesis EP countries converge at approximately 1.9% per annum, while IS countries converge at approximately 0.9% per annum. Copyright 2000 by Blackwell Publishing Ltd

Date: 2000
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