Once Again, is Openness Good for Growth?

By Ha Yan Lee, Luca A Ricci, Roberto Rigobon. Social Science Research Network, 2004

279 citations recorded by the source corpus.

Rodriguez and Rodrik (2000) argue that the relation between openness and growth is still an open question. One of the main problems in the assessment of the effect is the endogeneity of the relation. In order to address this issue, this paper applies the identification through heteroskedasticity methodology to estimate the effect of openness on growth while properly controlling for the effect of growth on openness. The results suggest that openness would have a positive effect on growth, although small. This result stands, despite the equally robust effect from growth to openness.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/9744d7ba277bf304870c87301ad4baba60852d2a

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Economics and Econometrics

1. E. Opoku
2. R. Commodore
3. Tony Nwanji
4. A. Lawal
5. Victor Ahmed
6. Abiola Asaleye
7. D. Sakyi
8. A. Maza

Citations in the corpus

• Government size and growth: Accounting for economic freedom and globalization (2010, background): “Regarding the growth effects of economic openness and globalization, Lee Ha et al. (2004) demonstrate that economic openness has a causal positive effect of on growth.”
• Economic growth, financial development and trade openness in Nigeria: An application of the ARDL bound testing approach (2016, background): “For instance, Yanikkaya (2003) and Jung and Marshall (1985) are of the view that no significant relationship exists between trade openness and economic growth, Lee, Ricci, and Rigobon (2004) opined that a positive relationship exists between the two.”
• Determinants of total factor productivity : a literature review (2007, background): “Other examples of micro studies finding a positive correlation between R&D investment and TFP growth include Lichtenberg and Siegel (1991) on 2,000 U.”
• Trade openness, income levels, and economic growth: The case of developing countries, 1970–2009 (2015, methodology): “…studies, the standard summary measure of trade openness (the one we call ‘nominal trade shares’ (hereafter NTS)) is given by (X + M)/GDP (see Yanikkaya 2003; Lee, Ricci, and Rigobon 2004; Rodrik, Subramanian, and Trebbi 2004; Kim and Lin 2009; Kim 2011; Sakyi et al. 2012; Gries and Redlin 2012).”
• The Impact of Financial Development and Trade on the Economic Growth of Bolivia (2012, background): “Lee et al. (2004) also find a positive, though small, effect of trade openness on growth, while Winters (2004) determines that the most plausible conclusion is that liberalization generally induces a temporary, but possibly long-lived, increase in growth.”
• Foreign Direct Investment, Trade Openness and Economic Growth in Ghana: An Empirical Investigation (2015, background): “Some papers supporting this positive openness-growth nexus are Harrison (1996); Edwards (1998); Greenaway, Morgan, and Wright (2002); Lee, Ricci, and Rigobon (2004); Wacziarg and Welch (2008), Squalli and Wilson (2011); Sakyi, Villaverde, and Maza (2014).”
• The relationship between trade openness and economic growth: Some new insights on the openness measurement issue (2011, unknown): “Empirical evidence tends to show that in the long-run more outward-oriented countries register higher economic growth (Sachs and Warner, 1995; Edwards, 1998; Frankel and Romer, 1999; Dollar and Kraay, 2004; Lee et al., 2004, Freund and Bolaky, 2008, and Chang et al., 2009, among others).”
• Trade openness, foreign aid and economic growth in post-liberalisation Ghana: An application of ARDL bounds test (2011, unknown): “Lee et al. (2004) used identification through heteroskedasticity to address potential endogeneity of trade openness for 100 countries over the 1961 to 2000 period and concluded that trade openness have a positive impact on growth, although this effect is small in magnitude.”
• Does Trade Reduce Poverty?: A View from Africa (2014, background): “Using either trade shares or indices of trade liberalization, Sachs and Warner (1995), Edwards (1997), Frankel and Romer (1999) Dollar and Kraay (2001) and Lee et al. (2004) find a positive association between liberalization and growth.”
• Is the Washington Consensus Dead? Growth, Openness, and the Great Liberalization, 1970s–2000s (2013, unknown): “…is looking for policy prescriptions, then ‘‘one can always object’’ to findings based on trade volumes rather than trade policies.6 In recent studies using aggregate policy measures, Lee, Ricci, and Rigobon (2004) find weaker results using average tariff or duty measures than with trade volumes.”
• Globalization and financial development (2009, methodology): “Using a different approach to identify the direction of causation, Lee, Ricci, and Rigobon (2004) also find that trade openness has a positive effect on growth.”