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The impact of openness and domestic performance on growth using nonparametric estimation

Xianbo Zhou and Kui-Wai Li ()

Applied Economics Letters, 2011, vol. 18, issue 11, 1065-1070

Abstract: This article distinguishes openness from domestic performance as different growth determinants and uses nonparametric estimation to reveal their direct effects on GDP. On average, openness promotes growth, but its effect on growth is negative when the levels of openness and domestic performance both are very low. The effect of domestic performance on growth is always positive averagely and locally, but its effect on growth is decreasing when the economy experiences the initial stage of globalization and domestic performance. Our result makes a useful contribution to the globalization debate because the distinction between openness and domestic performance shows how different economies can perform and improve in each aspect. Among the developing economies, openness is a necessary and prerequisite condition for growth, but the achievement of a high level in domestic performance is also important for growth.

Date: 2011
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DOI: 10.1080/13504851.2010.524605

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