Trade Liberalization, Economic Crises, and Growth

Rod Falvey, Neil Foster, David Greenaway*

*Corresponding author for this work

Research output: Contribution to journalArticleResearchpeer-review

31 Citations (Scopus)

Abstract

Many economic reforms are undertaken during an economic crisis, but is a crisis a good time to undertake trade reform? We investigate whether an economic crisis at the time of trade liberalization affects a country's subsequent growth performance. We employ threshold regression techniques on five crisis indicators to identify the "crisis values" and to estimate the differential growth effects in the crisis and non-crisis regimes. Although trade liberalization in both crisis and non-crisis periods raises subsequent growth, we find that an internal crisis implies a lower acceleration and an external crisis a higher acceleration relative to the non-crisis regime.

Original languageEnglish
Pages (from-to)2177-2193
Number of pages17
JournalWorld Development
Volume40
Issue number11
DOIs
Publication statusPublished - Nov 2012

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