TRADE, EFFICIENCY, AND GROWTH IN A CROSS-SECTION OF COUNTRIES

Some cross-country studies of the determinants of growth suggest only a modest role for trade policy. This study, measuring trade openness b y the rate of growth of the share of exports in GDP, argues that once the possibility of outliers for trade share growth is considered, a cl ose relationship between exports and growth emerges that works mainly through improved efficiency. This relationship proves to be robust to the inclusion of a set of commonly used right-side variables as well a s the corresponding import variable.