Language:
English
Pages:
Online-Ressource
Edition:
Online-Ausg. World Bank E-Library Archive Also available in print
Series Statement:
Policy research working paper 3763
Parallel Title:
Chang, Roberto Openness can be good for growth
Keywords:
Economic development
;
Free trade
;
Labor market
;
Economic development
;
Free trade
;
Labor market
Abstract:
"The authors study how the effect of trade openness on economic growth depends on complementary reforms that help a country take advantage of international competition. This issue is illustrated with a simple Harris-Todaro model where output gains after trade liberalization depend on the degree of labor market flexibility. In that model, trade protection may ameliorate the problem of underemployment (and underproduction) in sectors affected by labor market distortions. Hence, trade liberalization unambiguously increases per capita income only when labor markets are sufficiently flexible. The authors then present some panel evidence on how the growth effect of openness depends on a variety of structural characteristics. For this purpose, they use a non-linear growth regression specification that interacts a proxy of trade openness with proxies of educational investment, financial depth, inflation stabilization, public infrastructure, governance, labor-market flexibility, ease of firm entry, and ease of firm exit. They find that the growth effects of openness are positive and economically significant if certain complementary reforms are undertaken. "--World Bank web site
Note:
Includes bibliographical references
,
Title from PDF file as viewed on 11/18/2005
,
Also available in print.
URL:
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