The effects of trade agreements on the growth of major Latin American economies

While the connection between trade openness and economic growth is generally assumed to be positive, empirically, it is not clearly demonstrable. Examinations of the relationship between trade and growth have taken a number of approaches, differing both in the empirical methods, as well as the proxi...

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Bibliographic Details
Published in:The journal of international trade & economic development 2013-04, Vol.22 (3), p.377-397
Main Authors: de Boyrie, Maria E., Johns, Roger
Format: Article
Language:English
Subjects:
Economic growth
F14
F43
Globalization
Gross domestic product
growth
Growth models
Impact analysis
Latin America
Studies
Trade agreements
Trade liberalization
trade openness
Trade policy
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Summary:While the connection between trade openness and economic growth is generally assumed to be positive, empirically, it is not clearly demonstrable. Examinations of the relationship between trade and growth have taken a number of approaches, differing both in the empirical methods, as well as the proxies employed for trade openness, trade liberalization, and growth, but results have been decidedly mixed. Our research differs from prior studies in that it does not examine whether trade policy, trade liberalization or the level of trade itself enhances GDP; but rather whether participating in a specific type of trade agreement/union and/or the number of trade agreements to which a given country or region belongs enhances a country's level of growth. For this purpose, we study the relationship between trade agreements and growth for 18 Latin American countries between 1960 and 2008. Empirical analysis uses an adaptation of the neoclassical Solow growth model. Even though supporters of globalization advance the notion that involvement in trade agreements will help a country's economy, our findings suggest that that may not be consistently so.
ISSN:0963-8199
1469-9559
DOI:10.1080/09638199.2011.578753