How Much Do Trading Partners Matter for Economic Growth?

21 Pages Posted: 12 Feb 2006

See all articles by Vivek B. Arora

Vivek B. Arora

International Monetary Fund (IMF) - African Department

Athanasios Vamvakidis

International Monetary Fund (IMF) - European Department

Date Written: February 2004

Abstract

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.

Keywords: International Trade, Economic Growth

JEL Classification: F43, F15

Suggested Citation

Arora, Vivek and Vamvakidis, Athanasios, How Much Do Trading Partners Matter for Economic Growth? (February 2004). Available at SSRN: https://ssrn.com/abstract=878849 or http://dx.doi.org/10.2139/ssrn.878849

Vivek Arora (Contact Author)

International Monetary Fund (IMF) - African Department ( email )

700 19th Street, NW
Washington, DC 20431
United States

Athanasios Vamvakidis

International Monetary Fund (IMF) - European Department ( email )

700 19th Street NW
Washington, DC 20431
United States

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