Trade partner diversification and growth: how trade links matter

Ali Onder, Hakan Yilmazkuday

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    Abstract

    We analyse the effects of a country’s export connections on its income growth using Trade Partner Diversification (TPD) measures that capture the country’s relative importance in the international trade network. On top of the standard trade openness measures, TPD measures are shown to enter growth regressions positively and significantly, where one standard deviation increase in TPD is associated with a 1 to 1.5 percentage point increase in the annual growth rate. Threshold analyses show that TPD measures are positively and significantly cor- related with growth in countries that have low financial depth, high inflation, low levels of human capital, or high trade openness.
    Original languageEnglish
    Pages (from-to)241-258
    JournalJournal of Macroeconomics
    Volume50
    Early online date26 Oct 2016
    DOIs
    Publication statusPublished - Dec 2016

    Keywords

    • trade
    • economic growth
    • export networks
    • threshholds
    • cross-country analysis
    • trade partner diversification

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