Empirical Evidence on Trade Reform, Revealed Trade Openness, and Output Growth in Latin America. How Far Have We Come?

Abstract

Free trade reform promotes and consolidates businesses’ orientation to international markets. Using a sample of twenty Latin American countries, this study finds support for the hypothesis that higher revealed trade openness implies faster economic growth. However, at low output growth levels, increased revealed trade openness does not translate to faster output growth. Why more trade does not necessarily imply faster growth at all levels of revealed trade openness growth remains a conundrum. Failure to derive faster economic growth may compromise the prospects for sustainable trade reforms and thus the consolidation of new business ventures as engines for further growth.

Citation

Barboza, G.A. and Trejos, S.R. (2008), "Empirical Evidence on Trade Reform, Revealed Trade Openness, and Output Growth in Latin America. How Far Have We Come?", Multinational Business Review, Vol. 16 No. 4, pp. 53-86. https://doi.org/10.1108/1525383X200800018