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Do Natural Barriers Affect the Relationship Between Trade Openness and Growth? *
Author(s) -
Henry Michael,
Kneller Richard,
Milner Chris,
Girma Sourafel
Publication year - 2012
Publication title -
oxford bulletin of economics and statistics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.131
H-Index - 73
eISSN - 1468-0084
pISSN - 0305-9049
DOI - 10.1111/j.1468-0084.2011.00636.x
Subject(s) - openness to experience , productivity , affect (linguistics) , economics , liberalization , free trade , international economics , natural (archaeology) , endogenous growth theory , natural experiment , international trade , macroeconomics , psychology , economic growth , human capital , market economy , geography , social psychology , communication , statistics , mathematics , archaeology
This article investigates whether there are threshold effects in the relationship between openness and productivity growth that are fashioned by a country's natural barriers, using a cross‐country growth model. Alternative methods of modelling thresholds are explored. An endogenous threshold model is shown to be preferable to the use of interaction effects. The results identify critical levels of natural barriers which affect how greater openness or liberalization impacts on productivity growth. We find that only countries with higher natural barriers receive growth benefits from trade liberalization.