How Much Do Trading Partners Matter for Economic Growth?

Vivek Arora and Athanasios Vamvakidis

No 2004/026, IMF Working Papers from International Monetary Fund

Abstract: This paper empirically examines the extent to which a country's economic growth is influenced by its trading partner economies. Panel estimation results based on four decades of data for over 100 countries show that trading partners' growth and relative income levels have a strong effect on domestic growth, even after controlling for the influence of common global and regional trends. One interpretation is that conditional convergence is stronger, the richer are a country's trading partners. A general implication of the results is that industrial countries benefit from trading with developing countries, which grow rapidly, while developing countries benefit from trading with industrial countries, which have relatively high incomes.

Keywords: WP; trading partner; GDP; trading partner growth; country's trading partners; International Trade; Economic Growth; trading partners' growth; growth effect; growth performance; trading partner data; Personal income; Terms of trade; Population growth; Direction of trade; Global (search for similar items in EconPapers)
Pages: 21
Date: 2004-02-01
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Citations: View citations in EconPapers (35)

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Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:2004/026

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