The Role Of Trade Openness In Generating Economic Growth: A Review of the Literature

I. Introduction: we live in a globalized world were / economic integration/ Until recently, a growing academic consensus had emerged that both trade policy openness and higher ratios of trade volumes to GDP were positively correlated with growth, even after controlling for a variety of other growth determinants. Attempts to establish a causal link also suggested a positive impact of trade.2 In a sweeping critical survey of this literature, Rodríguez and Rodrik (2001) have suggested that these findings are less robust than claimed, due to difficulties in measuring openness, statistically sensitive specifications, the collinearity of protectionist policies with other bad policies and other econometric difficulties
Early endogenous growth models which are by Paul Romer (1986), Lucas (1988), and Rebelo (1991). The new growth models emphasizes that growth is an outcome of the economic policy not the result of forces outside the model and therefore focused on the relationship between trade and growth. Influenced by the new growth models, developing countries were encouraged to implement trade liberalization under the promise that it will promote faster growth. Many influential empirical papers tried to measure the effect of trade policy or openness on growth and came up with the evidence that trade restrictions have a negative impact on growth. However, the way some papers used to proxy openness >>>>>>.In addition some papers Ignored >>>.Some economists surveyed the literature between the eighties and the nineties on openness and growth and found that >>>>>>>>>>> such as the study conducted by <<< and by <<<<. It is not wrong to encourage out-warded policy but it is wrong to put such a heavy weight on it because that will distract d...

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