Trade Liberalization, Investment and Growth

Elena Seghezza ()

Rivista Internazionale di Scienze Sociali, 2003, vol. 111, issue 1, 77-101

Abstract: This paper presents five theoretical openness and growth links that can account for trade-induced investment-led growth. The links are all demonstrated with a neoclassical growth model developed in the context of trade models that allow for imperfect competition and scale economies. This sort of old-growth theory in a new-trade model has not been thoroughly explored in the literature since the profession skipped from old-growth-old-trade models straight to new-growth-new-trade models. Nonetheless, such models are necessary to explain several key aspects of the econometric evidence on trade and growth. For example, cross-country data suggests that openness influences growth only via its effect on investment, and suggests that openness promotes investment in all countries whatever the capital-intensive of their exports (contrary to predictions of the old-growth-old-trade models).

Keywords: exogenous growth; trade and growth; trade liberalization (search for similar items in EconPapers)
JEL-codes: D43 F12 F13 F43 O4 (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:vep:journl:y:2003:v:111:i:1:p:77-101

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