Trade policies and growth in emerging economies: policy experiments

Seung Mo Choi, Hwagyun Kim () and Xiaohan Ma ()
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Hwagyun Kim: Texas A&M University
Xiaohan Ma: Texas Tech University

Review of World Economics (Weltwirtschaftliches Archiv), 2021, vol. 157, issue 3, No 6, 603-629

Abstract: Abstract This paper analyzes a dynamic endogenous growth model to quantify the channels through which international trade affects longer-term growth of an emerging economy, with an emphasis on the role played by trade policies. In the model, trade can promote (i) labor migration from agricultural to non-agricultural sectors and (ii) the inflow of foreign knowledge to enhance productivity in non-agricultural sector. The model is estimated to match with the data from selected advanced and emerging economies. Policy experiments suggest that openness to trade and elimination of trade barriers would raise annual real GDP growth by up to three percentage points for decades.

Keywords: Growth; Structural transformation; Learning by doing; Knowledge spillover; Trade policies (search for similar items in EconPapers)
JEL-codes: O11 O24 O40 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/s10290-021-00413-6

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