Settling the trade/growth dispute – the impact of the Uruguay Round
Alan Taylor, Antoni Estevadeordal, 24 August 2008
The link between greater openness to trade and higher growth, once held sacred by economists, has come under contestation in recent years. Lowering trade barriers was perhaps the 1990s Washington Consensus’ most controversial prescription to developing countries, and numerous empirical studies claimed the growth effects of lower tariffs to be minimal.
However, the authors of DP 6942 argue that these studies are based upon a weak empirical basis. By using a growth model with a basis for trade they are able to extract the often unmeasured, dynamic gains from trade. The analysis compares pre- and post-Uruguay Round data, measuring the difference between the countries that liberalised and those that did not during this round of trade talks. They find that greater openness to trade led to an increase in growth of about 1% of GDP each year.
This may appear to be quite small. However, Taylor and Estevadeordal remind us that almost 20 years on from the Uruguay Round, the countries that liberalised have since benefited from an impressive 15-20% boost in income growth – a gain that has surely made a significant difference to their development.
Summary by CEPR staff
Topics: Development, International trade
Tags: developing countries, economic growth, GATT, trade liberalisation, Uruguay Round
- A tale of two depressions: What do the new data tell us? February 2010 updateEichengreen, O’Rourke
- The ECB’s stealth bailoutSinn
- Educated in America: College graduates and high school dropoutsHeckman, LaFontaine
- Eurozone breakup would trigger the mother of all financial crisesEichengreen
- Panic-driven austerity in the Eurozone and its implicationsDe Grauwe, Ji
Claessens, 18 April 2014
Campos, Coricelli, Moretti
Ostry, Berg, Tsangarides
CEPR Policy Research
- The buyer margins of firms' exportsCarballo, Ottaviano, Volpe
- Commodity and Equity Markets: Some Stylized Facts from a Copula ApproachDelatte, Lopez
- Ethnic Unemployment Rates and Frictional MarketsGobillon, Rupert, Wasmer
- Finance and Poverty: Evidence from IndiaAyyagari, Beck, Hoseini
- The Manipulation of Basel Risk-WeightsMariathasan, Merrouche