30 septembre 2011

Market access and economic development

Ci-dessous un texte initialement non destiné au blog (car en globish) sur l'accès au marché et le développement, mais ayant la flemme de traduire je vous le livre sans plus d'efforts considérant que c'est tout de même très accessible.

"Do countries with lower barriers to international trade experience faster economic progress? Few questions have been more vigorously debated in the history of economic thought, and none is more central to the vast literature on trade and development."
Rodriguez and Rodrick (2000)

Anti-globalization activists are against international trade because they believe that trade liberalization fosters international income inequalities. Economists have plenty of theoretical models to prove that trade liberalization is a Pareto improvement .... However, when turning to the data, evidences are scarce according to Frankel and Romer (1999). In the same vein, Rodriguez and Rodrick (2000) show a weak negative relationship between GDP and trade protection which is not statistically significant. This result is reported below by Figure 1 for two measures of trade restrictions.

But recent papers have challenged this conclusion by showing that determinants of trade, such as geography, impact positively on growth (Frankel and Romer, 1999) and on income disparities (Redding and Venables, 2004). Their analysis is a two-step procedure where the first step is based on a gravity equation.

The trade gravity literature has identified three main variables that strongly impact on bilateral trade : the market access, the supplier access and bilateral distances. 

According to Redding and Venables (2004), the correlation coefficients between the trade/GDP ratio and the market and supplier access are 0.14 and 0.37 after controlling for technology and other determinants of income levels (endowment in resources, climate, institutions, etc.). 

Without any control the slope of the relationship that links GDP per capita to market access, represented in Figure 2 (borrowed from Boulhol and de Serre, 2010), decrease from 0.5 when the world is taken into account to 0.09 when the analysis focuses on OECD countries. This coefficient decreases again when the sample is reduced to high-income countries of the OECD.
Thus the strong relationship between market access and income seems to concern mainly developing countries. This analysis thus indicates the importance of trade for development.

F. Candau

  • Boulhol and de Serres (2010), "Have developed countries escaped the curse of distance", Journal of Economic Geography, vol 1°(1)
  • Frankel and Romer (1999), "Does trade causes growth", American Economic Review, vol 59(3) pp 379
  • Head and Mayer (2010), Gravity, "market potential and economic development", Journal of Economic Geography, pp 1-14
  • Redding and Venables (2004), "Economic geography and international inequity", Journal of International Economics, 62(2004), pp 53-82
  • Rodriguez and Rodrick (2000), "Trade Policy and Economic Growth: A Skeptic's Guide to the Cross National Evidence", NBER Macroeconomics Annual, Vol 15 pp 261-325

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