[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/a/bla/jecsur/v17y2003i3p363-396.html
   My bibliography  Save this article

How Large Is International Trade’s Effect on Economic Growth?

Author

Listed:
  • Joshua J. Lewer
  • Hendrik Van den Berg
Abstract
The estimated static welfare gains from international trade are very small, on the order of one percent of GDP. The case for free trade is therefore increasingly linked to trade’s apparent positive effects on economic growth. But how large are these growth effects? The vast empirical literature has emphasized the statistical significance, not the economic significance, of the trade‐growth relationship. This survey’s re‐examination of the empirical literature focuses on the size of the relationship between trade and growth. Our survey reveals that the many empirical studies are surprisingly consistent in terms of the size of the relationship: A one percentage point increase in the growth of exports is associated with a one‐fifth percentage point increase in economic growth. Given the power of compounding, the effect of trade on growth is very important for human welfare.

Suggested Citation

  • Joshua J. Lewer & Hendrik Van den Berg, 2003. "How Large Is International Trade’s Effect on Economic Growth?," Journal of Economic Surveys, Wiley Blackwell, vol. 17(3), pages 363-396, July.
    • Handle: RePEc:bla:jecsur:v:17:y:2003:i:3:p:363-396
    DOI: 10.1111/1467-6419.00198
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/1467-6419.00198
    Download Restriction: no
    File URL: https://libkey.io/10.1111/1467-6419.00198?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Judith Giles & Cara Williams, 2001. "Export-led growth: a survey of the empirical literature and some non-causality results. Part 2," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 9(4), pages 445-470.
    2. Bernard, Andrew B. & Bradford Jensen, J., 1999. "Exceptional exporter performance: cause, effect, or both?," Journal of International Economics, Elsevier, vol. 47(1), pages 1-25, February.
    3. Elhanan Helpman, 1999. "The Structure of Foreign Trade," Journal of Economic Perspectives, American Economic Association, vol. 13(2), pages 121-144, Spring.
    4. Serletis, Apostolos, 1992. "Export growth and Canadian economic development," Journal of Development Economics, Elsevier, vol. 38(1), pages 133-145, January.
    5. Balasubramanyam, V N & Salisu, M & Sapsford, David, 1996. "Foreign Direct Investment and Growth in EP and IS Countries," Economic Journal, Royal Economic Society, vol. 106(434), pages 92-105, January.
    6. Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2004. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development," Journal of Economic Growth, Springer, vol. 9(2), pages 131-165, June.
    7. Sofronis K. Clerides & Saul Lach & James R. Tybout, 1998. "Is Learning by Exporting Important? Micro-Dynamic Evidence from Colombia, Mexico, and Morocco," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(3), pages 903-947.
    8. Moschos, Demetrios, 1989. "Export expansion, growth and the level of economic development: An empirical analysis," Journal of Development Economics, Elsevier, vol. 30(1), pages 93-102, January.
    9. David Greenaway & David Sapsford, 1994. "What does liberalisation do for exports and growth?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 130(1), pages 152-174, March.
    10. Balassa, Bela, 1978. "Exports and economic growth : Further evidence," Journal of Development Economics, Elsevier, vol. 5(2), pages 181-189, June.
    11. Thomas J. Holmes & James A. Schmitz, 1995. "Resistance to new technology and trade between areas," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 19(Win), pages 2-17.
    12. David H. Romer & Jeffrey A. Frankel, 1999. "Does Trade Cause Growth?," American Economic Review, American Economic Association, vol. 89(3), pages 379-399, June.
    13. Amirkhalkhali, Saleh & Dar, Atul A., 1995. "A varying-coefficients model of export expansion, factor accumulation and economic growth: Evidence from cross-country, time series data," Economic Modelling, Elsevier, vol. 12(4), pages 435-441, October.
    14. MacDonald, James M, 1994. "Does Import Competition Force Efficient Production?," The Review of Economics and Statistics, MIT Press, vol. 76(4), pages 721-727, November.
    15. Amin Gutierrez de Pineres, Sheila & Ferrantino, Michael, 1997. "Export diversification and structural dynamics in the growth process: The case of Chile," Journal of Development Economics, Elsevier, vol. 52(2), pages 375-391, April.
    16. Brunner, Karl & Meltzer, Allan H., 1985. "Understanding monetary regimes," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 22(1), pages 1-8, January.
    17. Michaely, Michael, 1977. "Exports and growth : An empirical investigation," Journal of Development Economics, Elsevier, vol. 4(1), pages 49-53, February.
    18. T. N. Srinivasan & Jagdish Bhagwati, 2001. "Outward-Orientation and Development: Are Revisionists Right?," Palgrave Macmillan Books, in: Deepak Lal & Richard H. Snape (ed.), Trade, Development and Political Economy, chapter 1, pages 3-26, Palgrave Macmillan.
    19. Pradurnna B. RANA*, 1986. "EXPORTS AND ECONOMIC GROWTH: Further Evidence from Asian LDCs," Pakistan Journal of Applied Economics, Applied Economics Research Centre, vol. 5(2), pages 163-178.
    20. Srinivasan. T.N., 1997. "As the Century Turns: Analytics, Empirics and Politics of Development," Papers 783, Yale - Economic Growth Center.
    21. Devereux, Michael B, 1997. "Growth, Specialization, and Trade Liberalization," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(3), pages 565-585, August.
    22. Edwards, Sebastian, 1998. "Openness, Productivity and Growth: What Do We Really Know?," Economic Journal, Royal Economic Society, vol. 108(447), pages 383-398, March.
    23. Yoko Sazanami & Shujiro Urata & Hiroki Kawai, 1995. "Measuring the Costs of Protection in Japan," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 32, January.
    24. Ram, Rati, 1985. "Exports and Economic Growth: Some Additional Evidence," Economic Development and Cultural Change, University of Chicago Press, vol. 33(2), pages 415-425, January.
    25. Krueger, Anne O, 1997. "Trade Policy and Economic Development: How We Learn," American Economic Review, American Economic Association, vol. 87(1), pages 1-22, March.
    26. Francisco L. Rivera-Batiz & Luis A. Rivera-Batiz, 2018. "Economic Integration and Endogenous Growth," World Scientific Book Chapters, in: Francisco L Rivera-Batiz & Luis A Rivera-Batiz (ed.), International Trade, Capital Flows and Economic Development, chapter 1, pages 3-32, World Scientific Publishing Co. Pte. Ltd..
    27. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 71-102, October.
    28. Granger, C. W. J. & Newbold, P., 1974. "Spurious regressions in econometrics," Journal of Econometrics, Elsevier, vol. 2(2), pages 111-120, July.
    29. repec:bla:rdevec:v:3:y:1999:i:3:p:268-80 is not listed on IDEAS
    30. Donald R. Davis & David E. Weinstein, 2002. "What Role for Empirics in International Trade?," Aussenwirtschaft, University of St. Gallen, School of Economics and Political Science, Swiss Institute for International Economics and Applied Economics Research, vol. 57(04), pages 441-468, December.
    31. Sheila Amin Gutiérrez de Piñeres & Michael Ferrantino, 1999. "Export Sector Dynamics and Domestic Growth: The Case of Colombia," Review of Development Economics, Wiley Blackwell, vol. 3(3), pages 268-280, October.
    32. Rubina Vohra, 2001. "Export and economic growth: Further time series evidence from less-developed countries," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 7(3), pages 345-350, August.
    33. Harrison, Ann & Hanson, Gordon, 1999. "Who gains from trade reform? Some remaining puzzles," Journal of Development Economics, Elsevier, vol. 59(1), pages 125-154, June.
    34. Trefler, Daniel, 1995. "The Case of the Missing Trade and Other Mysteries," American Economic Review, American Economic Association, vol. 85(5), pages 1029-1046, December.
    35. Jeffrey D. Sachs & Andrew Warner, 1995. "Economic Reform and the Process of Global Integration," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 1-118.
    36. Anne O. Krueger, 1978. "Foreign Trade Regimes and Economic Development: Liberalization Attempts and Consequences," NBER Books, National Bureau of Economic Research, Inc, number krue78-1.
    37. Nadeem Burney, 1996. "Exports and economic growth: evidence from cross-country analysis," Applied Economics Letters, Taylor & Francis Journals, vol. 3(6), pages 369-373.
    38. Baldwin, Richard E, 1992. "Measurable Dynamic Gains from Trade," Journal of Political Economy, University of Chicago Press, vol. 100(1), pages 162-174, February.
    39. Leamer, Edward E., 1985. "Vector autoregressions for causal inference?," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 22(1), pages 255-304, January.
    40. Judith Giles & Cara Williams, 2001. "Export-led growth: a survey of the empirical literature and some non-causality results. Part 1," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 9(3), pages 261-337.
    41. Gary Clyde Hufbauer & Kimberly Ann Elliott, 1994. "Measuring the Costs of Protection in the United States," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 77, April.
    42. Ram, Rati, 1987. "Exports and Economic Growth in Developing Countries: Evidence from Time-Series and Cross-Section Data," Economic Development and Cultural Change, University of Chicago Press, vol. 36(1), pages 51-72, October.
    43. Kornai, Janos, 1992. "The Socialist System: The Political Economy of Communism," OUP Catalogue, Oxford University Press, number 9780198287766.
    44. Raymond Lubitz, 1973. "Export‐Led Growth In Industrial Economies," Kyklos, Wiley Blackwell, vol. 26(2), pages 307-321, January.
    45. Mr. Arvind Subramanian & Mr. Francesco Trebbi & Mr. Dani Rodrik, 2002. "Institutions Rule: The Primacy of Institutions over Integration and Geography in Economic Development," IMF Working Papers 2002/189, International Monetary Fund.
    46. Robert J. Blendon, 1997. "Bridging the Gap between the Public's and Economists' Views of the Economy," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 105-118, Summer.
    47. Augustin Kwasi Fosu, 1996. "Primary Exports and Economic Growth in Developing Countries," The World Economy, Wiley Blackwell, vol. 19(4), pages 465-475, July.
    48. van den Berg, Hendrik, 1997. "The relationship between international trade and economic growth in Mexico," The North American Journal of Economics and Finance, Elsevier, vol. 8(1), pages 1-21.
    49. V. N. Balasubramanyam & M. A. Salisu & David Sapsford, 1996. "Foreign Direct Investment, Trade Policy and Economic Growth," Palgrave Macmillan Books, in: V. N. Balasubramanyam & D. Greenaway (ed.), Trade and Development, chapter 1, pages 3-21, Palgrave Macmillan.
    50. Dominick Salvatore, 1983. "A Simultaneous Equations Model of Trade and Development with Dynamic Policy Simulations," Kyklos, Wiley Blackwell, vol. 36(1), pages 66-90, August.
    51. Tyler, William G., 1981. "Growth and export expansion in developing countries : Some empirical evidence," Journal of Development Economics, Elsevier, vol. 9(1), pages 121-130, August.
    52. Alam, M Shahid, 1991. "Trade Orientation and Macroeconomic Performance in LDCs: An Empirical Study," Economic Development and Cultural Change, University of Chicago Press, vol. 39(4), pages 839-848, July.
    53. Greenaway, David & Morgan, Wyn & Wright, Peter, 1997. "Trade liberalization and growth in developing countries: Some new evidence," World Development, Elsevier, vol. 25(11), pages 1885-1892, November.
    54. Otani, Ichiro & Villanueva, Delano, 1990. "Long-term growth in developing countries and its determinants: An empirical analysis," World Development, Elsevier, vol. 18(6), pages 769-783, June.
    55. Kavoussi, Rostam M., 1984. "Export expansion and economic growth : Further empirical evidence," Journal of Development Economics, Elsevier, vol. 14(1), pages 241-250.
    56. Jong Park & Penelope Prime, 1997. "Export performance and growth in China: a cross-provincial analysis," Applied Economics, Taylor & Francis Journals, vol. 29(10), pages 1353-1363.
    57. Kohli, Inderjit & Singh, Nirvikar, 1989. "Exports and growth : Critical minimum effort and diminishing returns," Journal of Development Economics, Elsevier, vol. 30(2), pages 391-400, April.
    58. Hotchkiss, Julie L. & Moore, Robert E. & Rockel, Mark, 1994. "Export expansion and growth at different stages of development," MPRA Paper 9320, University Library of Munich, Germany.
    59. repec:bla:kyklos:v:26:y:1973:i:2:p:307-21 is not listed on IDEAS
    60. V N Balasubramanyam & M Salisu & David Sapsford, "undated". "Foreign Direct Investment and Growth: New Hypotheses and Evidence," Working Papers ec7/96, Department of Economics, University of Lancaster.
    61. Fosu, Augustin Kwasi, 1990. "Exports and economic growth: The African case," World Development, Elsevier, vol. 18(6), pages 831-835, June.
    62. Pritchett, Lant, 1996. "Measuring outward orientation in LDCs: Can it be done?," Journal of Development Economics, Elsevier, vol. 49(2), pages 307-335, May.
    63. Heitger, Bernhard, 1986. "Import protection and export performance: Their impact on economic growth," Kiel Working Papers 260, Kiel Institute for the World Economy (IfW Kiel).
    64. Robert McNab & Robert Moore, 1998. "Trade policy, export expansion, human capital and growth," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 7(2), pages 237-256.
    65. Robert C. Feenstra, 1992. "How Costly Is Protectionism?," Journal of Economic Perspectives, American Economic Association, vol. 6(3), pages 159-178, Summer.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Harrison, Ann & Rodríguez-Clare, Andrés, 2010. "Trade, Foreign Investment, and Industrial Policy for Developing Countries," Handbook of Development Economics, in: Dani Rodrik & Mark Rosenzweig (ed.), Handbook of Development Economics, edition 1, volume 5, chapter 0, pages 4039-4214, Elsevier.
    2. Harrison, Ann E. & Rodriguez-Clare, Andres, 2009. "Trade, Foreign Investment, and Industrial Policy," MPRA Paper 15561, University Library of Munich, Germany.
    3. Tarlok Singh, 2010. "Does International Trade Cause Economic Growth? A Survey," The World Economy, Wiley Blackwell, vol. 33(11), pages 1517-1564, November.
    4. Aleh Mazol, 2015. "Exchange Rate, Imports of Intermediate and Capital Goods and GDP Growth in Belarus," BEROC Working Paper Series 32, Belarusian Economic Research and Outreach Center (BEROC).
    5. Ricardo A. López, 2005. "Trade and Growth: Reconciling the Macroeconomic and Microeconomic Evidence," Journal of Economic Surveys, Wiley Blackwell, vol. 19(4), pages 623-648, September.
    6. Fadzil, Atikah & Masih, Mansur, 2017. "Does export lead growth? evidence from Japan," MPRA Paper 109290, University Library of Munich, Germany.
    7. Stefanescu, Razvan & Dumitriu, Ramona, 2014. "Investigation on the relationship between Romanian foreign trade and industrial production," MPRA Paper 62547, University Library of Munich, Germany.
    8. Vianna, Andre C. & Mollick, Andre V., 2021. "Threshold effects of terms of trade on Latin American growth," Economic Systems, Elsevier, vol. 45(4).
    9. Klaus Wälde & Christina Wood, 2004. "The empirics of trade and growth: where are the policy recommendations?," International Economics and Economic Policy, Springer, vol. 1(2), pages 275-292, January.
    10. Asmawi Hashim & Norimah Rambeli & Norasibah Abdul Jalil & Normala Zulkifli & Emilda Hashim & Noor Al-Huda Abdul Karim, 2019. "Does Export Led Growth Hypothesis Hold Under World Crisis Recovery Regime in Malaysia?," Research in World Economy, Research in World Economy, Sciedu Press, vol. 10(5), pages 9-19, December.
    11. Christian Dreger & Dierk Herzer, 2013. "A further examination of the export-led growth hypothesis," Empirical Economics, Springer, vol. 45(1), pages 39-60, August.
    12. van den Berg, Hendrik, 1997. "The relationship between international trade and economic growth in Mexico," The North American Journal of Economics and Finance, Elsevier, vol. 8(1), pages 1-21.
    13. Alper Aslan & Ebru Topcu, 2018. "The Relationship between Export and Growth: Panel Data Evidence from Turkish Sectors," Economies, MDPI, vol. 6(2), pages 1-15, April.
    14. Abdullahi Ahmed & Enjiang Cheng & George Messinis, 2011. "The role of exports, FDI and imports in development: evidence from Sub-Saharan African countries," Applied Economics, Taylor & Francis Journals, vol. 43(26), pages 3719-3731.
    15. Hye, Qazi Muhammad Adnan & Wizarat, Shahida & Lau, Wee-Yeap, 2013. "Trade-led growth hypothesis: An empirical analysis of South Asian countries," Economic Modelling, Elsevier, vol. 35(C), pages 654-660.
    16. Pushpa Trivedi & Narayan Chandra Pradhan, 2010. "Exports and Growth Nexus in India: An Econometric Analysis," Millennial Asia, , vol. 1(1), pages 97-121, January.
    17. Sayef Bakari, 2017. "The Three-Way Linkages Between Export, Import And Economic Growth: New Evidence From Tunisia," Journal of Smart Economic Growth, , vol. 2(3), pages 13-53, December.
    18. repec:wsr:wpaper:y:2012:i:084 is not listed on IDEAS
    19. Onafowora, Olugbenga A. & Owoye, Oluwole, 1998. "Can Trade Liberalization Stimulate Economic Growth in Africa?," World Development, Elsevier, vol. 26(3), pages 497-506, March.
    20. Turan Subasat, 2003. "Does the Dollar Index Really Measure Outward Orientation?," International Review of Applied Economics, Taylor & Francis Journals, vol. 17(3), pages 309-326.
    21. Jong Park & Penelope Prime, 1997. "Export performance and growth in China: a cross-provincial analysis," Applied Economics, Taylor & Francis Journals, vol. 29(10), pages 1353-1363.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jecsur:v:17:y:2003:i:3:p:363-396. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0950-0804 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.