TY - JOUR
T1 - Impact of openness on growth in different country groups
AU - Wang, Chengang
AU - Liu, Xiaming
AU - Wei, Yingqi
PY - 2004/4
Y1 - 2004/4
N2 - This paper evaluates the impact of openness on growth in different country groups using a panel of 79 countries over the period 1970–98. It distinguishes itself from many existing studies in three aspects: Firstly, both trade and FDI are included as measures of openness. Secondly, countries are classified into high-, middle- and low-income groups to compare the roles of trade and FDI in these groups. Thirdly, the possible problems of endogeneity and multicollinearity of trade and FDI are carefully dealt with in a panel data setting. The main findings are as follows. Total trade has a general positive impact on growth in all country groups, although the impact from imports is not significant in high-income countries. FDI has a positive impact on growth in high- and middle-income countries, but not in low-income countries. With the existing absorptive capabilities, low-income countries can benefit from both exports and imports, but not from FDI. These findings suggest that trade and FDI affect growth through different channels and under different conditions. The paper also discusses important policy implications.
AB - This paper evaluates the impact of openness on growth in different country groups using a panel of 79 countries over the period 1970–98. It distinguishes itself from many existing studies in three aspects: Firstly, both trade and FDI are included as measures of openness. Secondly, countries are classified into high-, middle- and low-income groups to compare the roles of trade and FDI in these groups. Thirdly, the possible problems of endogeneity and multicollinearity of trade and FDI are carefully dealt with in a panel data setting. The main findings are as follows. Total trade has a general positive impact on growth in all country groups, although the impact from imports is not significant in high-income countries. FDI has a positive impact on growth in high- and middle-income countries, but not in low-income countries. With the existing absorptive capabilities, low-income countries can benefit from both exports and imports, but not from FDI. These findings suggest that trade and FDI affect growth through different channels and under different conditions. The paper also discusses important policy implications.
UR - http://onlinelibrary.wiley.com/doi/10.1111/j.0378-5920.2004.00614.x/abstract
UR - http://www.scopus.com/inward/record.url?scp=2442636255&partnerID=8YFLogxK
U2 - 10.1111/j.0378-5920.2004.00614.x
DO - 10.1111/j.0378-5920.2004.00614.x
M3 - Article
AN - SCOPUS:2442636255
VL - 27
SP - 567
EP - 585
JO - World Economy
JF - World Economy
SN - 0378-5920
IS - 4
ER -