Chapter

Openness and Growth: What's the Empirical Relationship?

Robert E. Baldwin

in Challenges to Globalization

Published by University of Chicago Press

Published in print April 2004 | ISBN: 9780226036151
Published online February 2013 | e-ISBN: 9780226036557 | DOI: http://dx.doi.org/10.7208/chicago/9780226036557.003.0014
Openness and Growth: What's the Empirical Relationship?

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This chapter surveys the views of economists and policymakers about the relationships between economic openness and growth, indicating how and why these views significantly changed over the last fifty years, and pointing out the main reasons for the disagreements. It first examines the 1950s and 1960s, when import substitution was the dominant growth policy in the developing countries and there was extensive government intervention in many industrial countries aimed at influencing growth rates. The chapter then considers the period from the 1970s into the 1990s, in which the findings from an increasing number of studies of the growth experiences of individual countries caused more and more economists and policymakers to become skeptical about the growth merits of import substitution policies and to begin to advocate more export-oriented, outward-looking trade policies. Next, it briefly outlines some of the new relationships between trade and growth brought out by the so-called new growth literature of the late 1980s and early 1990s, which, together with the development of new econometric techniques for dealing with time series data, has stimulated new efforts to unravel the relationships between trade and growth through cross-country statistical analyses. A commentary is also included at the end of the chapter.

Keywords: economic openness; economic growth; export; import substation; trade policies

Chapter.  12269 words. 

Subjects: International Economics

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