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Trade Openness, Structural Change and Total Factor Productivity

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  • Sohrab Abizadeh
  • Manish Pandey

Abstract

The impact of trade openness on growth of total factor productivity (TFP) is investigated. Given the differences in tradability of goods across sectors as well as the ongoing structural change, we examine whether trade openness has had a differential impact on TFP growth of the three main sectors of an economy. While the positive impact of openness on TFP growth for the aggregate economy is confirmed, openness has had no appreciable impact on the growth of TFP in the agricultural and industrial sectors. We find that the positive effect of openness on TFP growth for the economy as a whole was mostly due to the positive relationship between the two variables for the services sector. Further, we conclude that the lack of a general consensus in past studies could be due to their neglect of structural change and temporal factors when analyzing the trade-TFP nexus.

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  • Sohrab Abizadeh & Manish Pandey, 2009. "Trade Openness, Structural Change and Total Factor Productivity," International Economic Journal, Taylor & Francis Journals, vol. 23(4), pages 545-559.
    • Handle: RePEc:taf:intecj:v:23:y:2009:i:4:p:545-559
    DOI: 10.1080/10168730903372273
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    Cited by:

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    2. Brinca, Pedro, 2014. "Distortions in the neoclassical growth model: A cross-country analysis," Journal of Economic Dynamics and Control, Elsevier, vol. 47(C), pages 1-19.
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    5. Ibrahim, Muazu, 2020. "Effects of trade and financial integration on structural transformation in Africa: New evidence from a sample splitting approach," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 556(C).
    6. Rumánková, Lenka & Kuzmenko, Elena & Benešová, Irena & Smutka, Luboš & Laputková, Adriana, 2020. "Animal Husbandry Export Measures Productivity: What is the Position of the Czech Republic?," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 10(3), December.
    7. Abdul Majeed Seidu & Aleksandar Vasilev, 2025. "Impact of trade liberalisation on Ghana’s Agricultural Sector," Journal of Economics and Econometrics, Economics and Econometrics Society, vol. 68(1), pages 17-50.
    8. Thanh Dinh Su & Canh Phuc Nguyen, 2022. "Productive Contribution of Public Spending and Human Capital in Developing Countries Revisited: The Role of Trade Openness," Foreign Trade Review, , vol. 57(1), pages 66-84, February.
    9. Ali, Amjad, 2022. "Financial Liberalization, Institutional Quality and Economic Growth Nexus: Panel Analysis of African Countries," MPRA Paper 116101, University Library of Munich, Germany.
    10. Walker, Sarah, 2012. "The (Rail)road to Structural Change: Transportation Costs, Integration, and Production Specialization," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124614, Agricultural and Applied Economics Association.

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