Growth and Trade vs. Trade and Growth

Growth and Trade vs. Trade and Growth In the traditional trade literature, there is a well-developed area analyzing the effect of growth on trade and its reflection on income growth. This literature developed already in the 1950s and 1960s. Generally speaking, an interest in the effects of trade on growth has also existed for many years, where trade has often been viewed as an engine of growth. Cases in point are the "East Asian Tigers" and Japan which have especially benefited from outward-looking policies. In this paper, we analyze the relationship between economic growth and growth in income terms of trade, arguing that income terms of trade is a useful concept in analyses of the link between trade and growth. Our results suggest that fast-growing countries have either specialized in sectors with a relatively favorable development with regard to world market prices, or they have managed to successively improve quality within sectors, thereby avoiding falling terms of trade in spite of large increases in export volumes. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Small Business Economics Springer Journals

Growth and Trade vs. Trade and Growth

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Publisher
Kluwer Academic Publishers
Copyright
Copyright © 2002 by Kluwer Academic Publishers
Subject
Business and Management; Management; Microeconomics; Entrepreneurship; Industrial Organization
ISSN
0921-898X
eISSN
1573-0913
D.O.I.
10.1023/A:1016241416227
Publisher site
See Article on Publisher Site

Abstract

In the traditional trade literature, there is a well-developed area analyzing the effect of growth on trade and its reflection on income growth. This literature developed already in the 1950s and 1960s. Generally speaking, an interest in the effects of trade on growth has also existed for many years, where trade has often been viewed as an engine of growth. Cases in point are the "East Asian Tigers" and Japan which have especially benefited from outward-looking policies. In this paper, we analyze the relationship between economic growth and growth in income terms of trade, arguing that income terms of trade is a useful concept in analyses of the link between trade and growth. Our results suggest that fast-growing countries have either specialized in sectors with a relatively favorable development with regard to world market prices, or they have managed to successively improve quality within sectors, thereby avoiding falling terms of trade in spite of large increases in export volumes.

Journal

Small Business EconomicsSpringer Journals

Published: Oct 13, 2004

References

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