Connecting Brazil to the world

Patricia Ellen, Jaana Remes 12 July 2014

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Despite a decade of rapid growth and falling poverty rates, Brazil has failed to match the global average for income growth – let alone to achieve the kind of impressive gains posted by other rapidly transforming emerging economies. As of 2012, Brazil had become the world’s seventh-largest economy, but it ranked only 95th in the world for gross national income per capita (IHS Economics and Country Risk data). To raise household living standards, Brazil needs to find a new formula for accelerating productivity growth.

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Topics:  Development International trade Productivity and Innovation

Tags:  development, growth, productivity, globalisation, MERCOSUR, trade, openness, Brazil, global value chains

Trade facilitation matters!

Gary Clyde Hufbauer, Martin Vieiro, John S.Wilson 14 September 2012

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Once upon a time, most economists thought that tariffs, quotas and exchange controls were the alphas and omegas of trade policy. Hence their consensus recommendations: slash tariffs, eliminate quotas, float the exchange rate and commerce would blossom. Not quite so! It turns out that trade costs decisively separate countries that participate fully in the world economy and countries that are marginalised. Perhaps the biggest new idea is that trade transaction costs are not simply a matter of geography and fate.

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Topics:  International trade

Tags:  growth, openness, trade facilitation

Openness to international trade causes growth in sub-Saharan Africa

Markus Brückner, Daniel Lederman 02 May 2012

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In recent years, sub-Saharan African countries have grown remarkably. According to data from the Penn World Table 7.0 (Heston et al. 2011), average annual real GDP per capita growth from 2005-9 has been over 2.5% (3.5% when excluding 2008 and 2009). This recent growth performance is remarkable given that, for over four decades since 1960, real GDP per capita growth in sub-Saharan Africa was dismal, averaging less than 0.5% per annum. Sub-Saharan African countries in recent years have also made significant progress in terms of poverty reduction (Chen and Ravallion 2010).

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Topics:  Development International trade

Tags:  growth, Africa, openness

Does openness generate growth? Reconciling the experiences of Mexico and China

Timothy Kehoe, Kim Ruhl 19 November 2011

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Does opening to international trade and foreign investment generate economic growth? A large empirical literature employs regressions with a country’s growth rate as the dependent variable and some measure of openness among the independent variables. Although some researchers find that growth is positively correlated with the share of trade in GDP, Rodríguez and Rodrik (2001) point out that the trade share is not a direct measure of policy. When the dependent variable is a measure of policy, the results are ambiguous and highly sensitive to the exact specification of the regression.

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Topics:  International finance International trade

Tags:  China, free trade, financial globalisation, openness, Mexico

The policy roots of finance

Giuseppe Bertola, Anna Lo Prete 20 May 2010

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Finance boomed for quite some time. And then it crashed. To understand what might happen as the world begins to emerge from the crisis, we need to try and understand where finance came from. At the global level, finance grew along with international economic integration at the turn of this century, as well as at the beginning of the 20th century.

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Topics:  Global economy International finance

Tags:  financial development, openness, financial deregulation

Does openness increase volatility? Not if countries are sufficiently diversified

Mona Haddad, Jamus Lim, Christian Saborowski 21 March 2010

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The epicentre of the global economic crisis was the financial markets of the industrialised world, yet developing countries have felt the tremors. Many, including those without close financial ties to the developed world, were driven into recession as global demand plummeted and the largest drop in global trade volumes since the Second World War ensued. Naturally, open economies heavily reliant on export revenues were among those hardest hit by the crisis.

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Topics:  Development International trade

Tags:  volatility, diversification, openness

How do governments react to globalisation?

Gino Gancia, Paolo Epifani 28 March 2009

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It is widely believed that governments of more open countries are forced to reduce taxes and public expenditure to attract foreign investment and human capital, or at least to prevent domestic firms from relocating abroad. Although this is certainly possible, the data tell a different story. As first shown by David Cameron (1978), and then by Dani Rodrik (1997, 1998), more open countries have bigger governments. In Epifani and Gancia (2009), we provide more evidence on this puzzling stylised fact.

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Topics:  International trade

Tags:  globalisation, government size, openness, PE