Trade liberalisation, the balance of payments and growth in Latin America

Arbeitspapier

The broad purpose of trade liberalisation is to raise the rate of growth of countries on a sustainable basis, consistent with the achievement of other macroeconomic objectives. In this paper we consider whether trade liberalisation in seventeen countries of Latin America has improved the trade-off between GDP growth and the trade balance, allowing the countries to grow faster without sacrificing foreign exchange. We find that in the aftermath of liberalisation, the majority of countries did grow faster, but at the expense of a deteriorating trade balance. Testing formally for the impact of trade liberalisation in a full model of trade balance determination, we find that only in Chile and Venezuela has the trade-off unequivocally improved. In other countries there has been a significant deterioration or no change. Nine out of the seventeen countries have grown faster post-liberalisation than pre-liberalisation but, except for Chile and Venezuela, at the expense of a wider trade or current account deficit.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Department of Economics Discussion Paper ; No. 05,05

Classification and Topics

• Classification: Wirtschaft ; Single Equation Models; Single Variables: Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions ; Single Equation Models; Single Variables: Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes ; Trade Policy; International Trade Organizations ; Current Account Adjustment; Short-term Capital Movements ; Economic Growth of Open Economies
• Subject: Latin America ; Trade Liberalisation ; Growth ; Balance of Payments ; Außenhandelsliberalisierung ; Wirtschaftswachstum ; Handelsbilanz ; Zahlungsbilanz ; Lateinamerika

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Pacheco-López, Penélope ; Thirlwall, A. P.
• Event: Veröffentlichung
• (who): University of Kent, Department of Economics
• (where): Canterbury
• (when): 2005

Further information

• Handle: http://hdl.handle.net/10419/68103
• Last update: 10.03.2025, 11:46 AM CET