Regional Trade Agreements Versus Broad Liberalization: Which Path Leads to Faster Growth? Time-Series Evidence

34 Pages Posted: 15 Feb 2006

See all articles by Athanasios Vamvakidis

Athanasios Vamvakidis

International Monetary Fund (IMF) - European Department

Date Written: March 1998

Abstract

Should a closed economy open its trade to all countries or limit itself to participation in regional trade agreements (RTAs)? Based on time-series evidence for a data set for 1950-92, this paper estimates and compares the growth performance of countries that liberalized broadly and those that joined an RTA. The comparisons show that economies grew faster after broad liberalization, both in the short and long run, but slower after participation in an RTA. Economies also had higher investment shares after broad liberalization, but lower ones after joining an RTA. The policy implications support broad liberalization.

Keywords: Economic Growth of Open Economies

JEL Classification: F43

Suggested Citation

Vamvakidis, Athanasios, Regional Trade Agreements Versus Broad Liberalization: Which Path Leads to Faster Growth? Time-Series Evidence (March 1998). IMF Working Paper No. 98/40, Available at SSRN: https://ssrn.com/abstract=882287 or http://dx.doi.org/10.2139/ssrn.882287

Athanasios Vamvakidis (Contact Author)

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

700 19th Street NW
Washington, DC 20431
United States

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