Nonlinearity between Trade Openness and Economic Development

Dong Hyeon Kim, Shu Chin Lin, Yu Bo Suen

Research output: Contribution to journalArticlepeer-review

38 Citations (Scopus)


This paper utilizes the instrumental variable threshold regressions approach to reassess the trade-development link. It finds evidence that trade openness contributes to uneven development. Greater trade openness tends to have beneficial effects on real development of high-income countries. For low-income ones, however, trade openness appears to influence real income in a significant and negative way. The data also reveal that greater trade openness has a positive effect on capital accumulation, productivity growth, and financial development in high-income countries, but a negative impact in low-income ones.

Original languageEnglish
Pages (from-to)279-292
Number of pages14
JournalReview of Development Economics
Issue number2
Publication statusPublished - 2011 May
Externally publishedYes

ASJC Scopus subject areas

  • Geography, Planning and Development
  • Development


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