How Much Do Trading Partners Matter for Economic Growth?

By Vivek B. Arora, Athanasios Vamvakidis

February 1, 2004

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Vivek B. Arora, and Athanasios Vamvakidis. How Much Do Trading Partners Matter for Economic Growth?, (USA: International Monetary Fund, 2004) accessed December 22, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper empirically examines the extent to which a country's economic growth is influenced by its trading partner economies. Panel estimation results based on four decades of data for over 100 countries show that trading partners' growth and relative income levels have a strong effect on domestic growth, even after controlling for the influence of common global and regional trends. One interpretation is that conditional convergence is stronger, the richer are a country's trading partners. A general implication of the results is that industrial countries benefit from trading with developing countries, which grow rapidly, while developing countries benefit from trading with industrial countries, which have relatively high incomes.

Subject: Direction of trade, International trade, National accounts, Personal income, Population and demographics, Population growth, Terms of trade

Keywords: Country's trading partners, Direction of trade, Economic Growth, GDP, Global, Growth effect, Growth performance, International Trade, Personal income, Population growth, Terms of trade, Trading partner, Trading partner data, Trading partner growth, Trading partners' growth, WP

Publication Details

Pages:

21
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2004/026
Stock No:

WPIEA0262004
ISBN:

9781451844412
ISSN:

1018-5941

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