How Much Do Trading Partners Matter for Economic Growth?

Author: Mr. Vivek Arora and Mr. Athanasios Vamvakidis

Volume/Issue: Volume 2004 Issue 026

Publication date: February 2004

ISBN: 9781451844412

$20.00

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Topics covered in this book

This title contains information about the following subjects. Click on a subject if you would like to see other titles with the same subjects.

Exports and Imports , Economics- Macroeconomics , Demography , WP , trading partner , GDP , trading partner growth , country's trading partners , International Trade , Economic Growth , trading partners' growth , growth effect , growth performance , trading partner data , Personal income , Terms of trade , Population growth , Direction of trade , Global

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Summary

This paper empirically examines the extent to which a country's economic growth is influenced by its trading partner economies. Panel estimation results based on four decades of data for over 100 countries show that trading partners' growth and relative income levels have a strong effect on domestic growth, even after controlling for the influence of common global and regional trends. One interpretation is that conditional convergence is stronger, the richer are a country's trading partners. A general implication of the results is that industrial countries benefit from trading with developing countries, which grow rapidly, while developing countries benefit from trading with industrial countries, which have relatively high incomes.