Economies in Transition: How Important Is Trade Openness for Growth?* |
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Authors: | Tommaso Nannicini Andreas Billmeier |
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Institution: | 1. Bocconi University, Department of Economics, via R?ntgen 1, 20136 Milan, Italy (e‐mail: tommaso.nannicini@unibocconi.it);2. Ziff Brothers Investments, New York, USA (e‐mail: andreas.billmeier@eui.eu) |
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Abstract: | We investigate the effect of trade openness on economic growth in transition countries using a transparent statistical methodology that leads to data‐driven case studies. In particular, we employ synthetic control methods in a panel of transition economies and compare GDP growth in treated (that is, open) countries with growth in a convex combination of similar but untreated (that is, closed) countries. We find that trade liberalization tends to have a positive effect on the pattern of real GDP per capita. One of our most robust results shows that making the transition without opening up to trade considerably hampers growth. |
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Keywords: | C21 C23 F43 O57 P2 |
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