Openess and Economic Growth: The case of European Expansion

Ngozo, Thandokuhle I. (2006): Openess and Economic Growth: The case of European Expansion.

Abstract

One of the rudiment features of international trade theory is that open economies achieve high economic growth rates than closed economies. This dissertation attempts to investigate the relationship between openness and growth by testing the hypothesis that openness causes growth. The analysis in this dissertation is limited to the member states of the European Union and some Eastern European countries. The data are analysed using the panel estimation. The sample groups of countries are divided into five groups. The countries are categorised by their period of accession to the European Union. The results of this dissertation show proposition that openness leads to economic growth is validated in three first groups of countries. However, for the last two groups of countries the hypothesis is not validated. For the group of countries that have not yet joined the European Union, the results show that openness does not cause growth. Moreover, there is also no clear evidence that openness cause growth for the group that consists of Eastern European countries that have just joined the European Union.

• Item Type: MPRA Paper
• Language: English
• Keywords: trade: growth: policy
• Subjects: F - International Economics > F1 - Trade > F16 - Trade and Labor Market Interactions

References

REFERENCES

H. Jones (1975), “An introduction to Modern Theories of Economic Growth”, The Garden City Press Limited, Hertfordshire

E. Mishan (1977), “The Economic Growth Debate: An Assessment”, George Allen and Unwin (Publishers) Ltd

F. Gerald, Scott (1987) “A New View of Economic Growth”, Oxford University Press

S. Maddala (1992), “Introduction to Econometrics”, Macmillan Oxford

N. Gujarati (1995), “Basic Econometrics”, Boston: McGraw Hill

C. Hill, W. Griffiths and G Judge (1997), “Undergraduate Econometrics”, New York, Chichester Willey

D. Sachs and M. Warner (1995), “Natural Abundance and Economic Growth”, NBER Working Paper

A. Winters (2003), “Trade liberalisation and Economic Performance: An Overview”, Centre for Economic Policy Research, London

E. Baldwin (2003), “Openness and Growth: What’s the empirical relationship?”, NBER Working Paper

E Kraev (2005), “Estimating GDP effects of trade liberalisation on developing countries”, Centre for Development, Policy and Research, London

M. Bussiere, J. Firdmuc and B. Schnatz (2005), “Trade Integration of Central and Eastern European Countries: Lesson from a Gravity model”, European Central Bank, Working Paper

A. Santos and P Thirlwall(2002), “The impact of Trade Liberalisation on Export Growth, Import Growth, the Balance of Trade and the Balancer of Payments of Developing countries” University of Kent

Frankel J. and D. Romer (1999), “Does Trade Cause Growth?, American Economic Review June 1999, pp. 37-39

Lee, J. (1993), “International Trade Distortions and Longrun Economic Growth”, International Monetary Fund Staff papers

S. Edwards (1998), “Openness, Productivity and Growth: What do we really know?”, Economic Journal 108, March 1998

H. Cassing and S. Tokarick (1995), “Trade and Grwoth in the Presence of Distortion”, International Monetary Fund Working Papers No. 5/12

F. Stiglitz and A. Charlton (2005), “Fair Trade for All: How Trade can promote Development”, Oxford University Press.