IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/6557.html
   My bibliography  Save this paper

International Trade and Per Capita Income Convergence: A Difference-in-Differences Analysis

Author

Listed:
  • Matthew J. Slaughter

Abstract

In this paper I analyze whether international trade contributes to per capita income convergence across countries. The analysis focuses on four important post-1945 multilateral trade liberalizations. To identify trade's effect on income dispersion, in each case I use a difference-in-differences' approach which compares the convergence pattern among the liberalizing countries before and after liberalization with the convergence pattern among randomly chosen control countries before and after liberalization. My main empirical result is that trade liberalization did not trigger convergence in any of the four cases. If anything, trade seems to have caused income divergence.

Suggested Citation

  • Matthew J. Slaughter, 1998. "International Trade and Per Capita Income Convergence: A Difference-in-Differences Analysis," NBER Working Papers 6557, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:6557
    Note: ITI
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w6557.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Alan V. DEARDORFF, 2011. "Firless Firwoes: How Preferences Can Interfere With The Theorems Of International Trade," World Scientific Book Chapters, in: Robert M Stern (ed.), Comparative Advantage, Growth, And The Gains From Trade And Globalization A Festschrift in Honor of Alan V Deardorff, chapter 13, pages 129-140, World Scientific Publishing Co. Pte. Ltd..
    2. Steven J. Davis, 1992. "Cross-Country Patterns of Change in Relative Wages," NBER Chapters, in: NBER Macroeconomics Annual 1992, Volume 7, pages 239-300, National Bureau of Economic Research, Inc.
    3. Coe, David T. & Helpman, Elhanan, 1995. "International R&D spillovers," European Economic Review, Elsevier, vol. 39(5), pages 859-887, May.
    4. Leamer, Edward E. & Levinsohn, James, 1995. "International trade theory: The evidence," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 26, pages 1339-1394, Elsevier.
    5. Ben-David, Dan, 1996. "Trade and convergence among countries," Journal of International Economics, Elsevier, vol. 40(3-4), pages 279-298, May.
    6. Krugman, Paul, 1979. "A Model of Innovation, Technology Transfer, and the World Distribution of Income," Journal of Political Economy, University of Chicago Press, vol. 87(2), pages 253-266, April.
    7. Jeffrey D. Sachs & Andrew Warner, 1995. "Economic Reform and the Process of Global Integration," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 1-118.
    8. Leamer, E.E., 1995. "The Heckscher-Ohlin Model in Theory and Practice," Princeton Studies in International Economics 77, International Economics Section, Departement of Economics Princeton University,.
    9. Baldwin, Richard E, 1992. "Measurable Dynamic Gains from Trade," Journal of Political Economy, University of Chicago Press, vol. 100(1), pages 162-174, February.
    10. Coe, David T & Helpman, Elhanan & Hoffmaister, Alexander W, 1997. "North-South R&D Spillovers," Economic Journal, Royal Economic Society, vol. 107(440), pages 134-149, January.
    11. Eaton, Jonathan & Kortum, Samuel, 1996. "Trade in ideas Patenting and productivity in the OECD," Journal of International Economics, Elsevier, vol. 40(3-4), pages 251-278, May.
    12. Findlay, Ronald, 1984. "Growth and development in trade models," Handbook of International Economics, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 1, chapter 4, pages 185-236, Elsevier.
    13. Slaughter, Matthew J, 1997. "Per Capita Income Convergence and the Role of International Trade," American Economic Review, American Economic Association, vol. 87(2), pages 194-199, May.
    14. Matthew J. Slaughter, 1997. "Per Capita Income Convergence and the Role of International Trade," NBER Working Papers 5897, National Bureau of Economic Research, Inc.
    15. Bernard, Andrew B & Jones, Charles I, 1996. "Comparing Apples to Oranges: Productivity Convergence and Measurement across Industries and Countries," American Economic Review, American Economic Association, vol. 86(5), pages 1216-1238, December.
    16. Matsuyama, Kiminori, 1996. "Why Are There Rich and Poor Countries? Symmetry-Breaking in the World Economy," Journal of the Japanese and International Economies, Elsevier, vol. 10(4), pages 419-439, December.
    17. Matthew J. Slaughter, 1995. "The Antebellum Transportation Revolution and Factor-Price Convergence," NBER Working Papers 5303, National Bureau of Economic Research, Inc.
    18. Dan Ben-David, 1993. "Equalizing Exchange: Trade Liberalization and Income Convergence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(3), pages 653-679.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dong-Hyeon Kim & Shu-Chin Lin, 2012. "Trade and income at different stages of economic development," Applied Economics, Taylor & Francis Journals, vol. 44(4), pages 409-421, February.
    2. Mr. Andrew Berg & Anne O. Krueger, 2003. "Trade, Growth, and Poverty: A Selective Survey," IMF Working Papers 2003/030, International Monetary Fund.
    3. Nasfi Fkili Wahiba, 2015. "Convergence and Divergence among Countries," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 5(3), pages 510-520, March.
    4. David EA Giles, 2005. "Output Convergence and International Trade: Time-Series and Fuzzy Clustering Evidence for New Zealand and her Trading Partners, 1950 - 1992," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 14(1), pages 93-114.
    5. Andrew B. Bernard & J. Bradford Jensen, 1999. "Exporting and Productivity," NBER Working Papers 7135, National Bureau of Economic Research, Inc.
    6. Singh, Ajit, 1999. "The role of employment and work in poverty eradication and empowerment and advancement of women," MPRA Paper 54923, University Library of Munich, Germany.
    7. Singh, Ajit & Zammit, Ann, 2000. "International Capital Flows: Identifying the Gender Dimension," World Development, Elsevier, vol. 28(7), pages 1249-1268, July.
    8. Singh, Ajit, 1999. "Global economic trends, development and social policy at Copenhagen plus five," MPRA Paper 53557, University Library of Munich, Germany.
    9. Ruth Marcela Aparicio, 2014. "Terms of trade and non-traditional exports: a microeconometric analysis," Investigación & Desarrollo, Universidad Privada Boliviana, vol. 2(1), pages 26-41.
    10. Alessia Lo Turco, 2005. "South-South Trade Agreements, Location of Production and Inequality in Latin America," Ibero America Institute for Econ. Research (IAI) Discussion Papers 127, Ibero-America Institute for Economic Research.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Slaughter, Matthew J., 2001. "Trade liberalization and per capita income convergence: a difference-in-differences analysis," Journal of International Economics, Elsevier, vol. 55(1), pages 203-228, October.
    2. Mark J. Holmes, 2005. "New evidence on long-run output convergence among Latin American countries," Journal of Applied Economics, Universidad del CEMA, vol. 8, pages 299-319, November.
    3. Ben-David, Dan & Loewy, Michael B, 1998. "Free Trade, Growth, and Convergence," Journal of Economic Growth, Springer, vol. 3(2), pages 143-170, June.
    4. Parikh, Ashok & Shibata, Miyuki, 2004. "Does trade liberalization accelerate convergence in per capita incomes in developing countries?," Journal of Asian Economics, Elsevier, vol. 15(1), pages 33-48, February.
    5. Matthew J. Slaughter, 1997. "Per Capita Income Convergence and the Role of International Trade," NBER Working Papers 5897, National Bureau of Economic Research, Inc.
    6. Mark J. Holmes, 2005. "Is Long-Run Output Convergence Associated With International Cooperation? Some New Evidence For Selected African Countries," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 30(2), pages 67-85, December.
    7. Connolly, Michelle, 1999. "North-South Technological Diffusion: A New Case for Dynamic Gains from Trade," Working Papers 99-08, Duke University, Department of Economics.
    8. Bhushan Praveen Jangam & Badri Narayan Rath, 2020. "Cross-country convergence in global value chains: Evidence from club convergence analysis," International Economics, CEPII research center, issue 163, pages 134-146.
    9. David EA Giles, 2005. "Output Convergence and International Trade: Time-Series and Fuzzy Clustering Evidence for New Zealand and her Trading Partners, 1950 - 1992," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 14(1), pages 93-114.
    10. Chad Stroomer & David E.A. Giles, 2003. "Income Convergence and trade Openness: Fuzzy Clustering and Time Series Evidence," Econometrics Working Papers 0304, Department of Economics, University of Victoria.
    11. Alejandro Diaz Bautista & Mauro Diaz Dominguez, 2004. "Capital Humano y Crecimiento Económico en México (1970-2000). Human Capital and Economic Growth in Mexico," Urban/Regional 0405008, University Library of Munich, Germany.
    12. Michelle P. Connolly, 1998. "The dual nature of trade: measuring its impact on imitation and growth," Staff Reports 44, Federal Reserve Bank of New York.
    13. FE, Doukouré Charles, 2010. "Réduction de Droits de Douane et Convergence Réelle dans l'UEMOA [Tariffs Reduction and Real Convergence in WAEMU]," MPRA Paper 26763, University Library of Munich, Germany.
    14. Ahmed Nawaz Hakro & Bashir Ahmad Fida, 2009. "Trade and Income Convergence in Selected South Asian Countries and Their Trading Partners," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 14(2), pages 49-70, Jul-Dec.
    15. Michelle P. Connolly, 1997. "Technological diffusion through trade and imitation," Staff Reports 20, Federal Reserve Bank of New York.
    16. Alexander B. Darku, 2021. "International trade and income convergence: Sorting out the nature of bilateral trade," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(4), pages 5337-5348, October.
    17. Ben-David, Dan & Loewy, Michael B, 1995. "Free Trade and Long-Run Growth," CEPR Discussion Papers 1183, C.E.P.R. Discussion Papers.
    18. Capolupo, Rosa, 2009. "The New Growth Theories and Their Empirics after Twenty Years," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 3, pages 1-72.
    19. Connolly, Michelle, 2003. "The dual nature of trade: measuring its impact on imitation and growth," Journal of Development Economics, Elsevier, vol. 72(1), pages 31-55, October.
    20. Markus Eberhardt & Francis Teal, 2011. "Econometrics For Grumblers: A New Look At The Literature On Cross‐Country Growth Empirics," Journal of Economic Surveys, Wiley Blackwell, vol. 25(1), pages 109-155, February.

    More about this item

    JEL classification:

    • F1 - International Economics - - Trade
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:6557. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.