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Trade Partner Diversification and Growth: How Trade Links Matter

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  • Ali Sina Önder

    (Department of Economics, University of Bayreuth)

  • Hakan Yilmazkuday

    (Department of Economics, Florida International University)

Abstract

We analyze the effects of a country's export connections on its income growth using Trade Partner Diversification (TPD) measures that capture the country's relative importance in the international trade network. On top of the standard trade openness measures, TPD measures are shown to enter growth regressions positively and significantly, where one standard deviation increase in TPD is associated with a 1 to 1.5 percentage point increase in the annual growth rate. Threshold analyses show that TPD measures are positively and significantly correlated with growth in countries that have low financial depth, high inflation, low levels of human capital, or high trade openness.

Suggested Citation

  • Ali Sina Önder & Hakan Yilmazkuday, 2016. "Trade Partner Diversification and Growth: How Trade Links Matter," Working Papers 1606, Florida International University, Department of Economics.
    • Handle: RePEc:fiu:wpaper:1606
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Trade Partner Diversification and Growth: How Trade Links Matter
      by Hakan Yilmazkuday in Hakan Yilmazkuday's Blog on 2016-12-17 03:01:00

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    More about this item

    Keywords

    Trade; Economic Growth; Export Networks; Thresholds; Cross-Country Analysis; Trade Partner Diversification;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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