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Trade and the Rate of Income Convergence

Dan Ben-David () and Ayal Kimhi

No 7642, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: To the extent that trade policy affects trade flows between countries, the ramifications can be far-reaching from an economic growth perspective. This paper examines one aspect of these ramifications, namely the impact of changes in the extent of trade between countries on changes in the rate of reduction in the size of the income gap that exists between them. Export and import data are used as the criteria for determining bilateral trade between major trade partners, resulting in the creation of 127 pairs of countries on the basis of export data and 134 pairs on the basis of import data. An increase in trade between major trade partners - and in particular, increased exports by poorer countries to their wealthier partners - is shown to be related to an increase in the rate of convergence between the countries.

JEL-codes: F1 O1 (search for similar items in EconPapers)
Date: 2000-04
New Economics Papers: this item is included in nep-dev
Note: ITI
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Published as Dan Ben-David & Ayal Kimhi, 2004. "Trade and the rate of income convergence," Journal of International Trade & Economic Development, Taylor and Francis Journals, vol. 13(4), pages 419-441, December.

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