Trade Liberalisation and the Trade-Off Between Growth and the Balance of Payments in Latin America

Pacheco-Lopez, Penelope and Thirlwall, Anthony P. (2007) Trade Liberalisation and the Trade-Off Between Growth and the Balance of Payments in Latin America. International Review of Applied Economics, 21 (4). pp. 469-490. ISSN 0269-2171. (The full text of this publication is not currently available from this repository. You may be able to access a copy if URLs are provided)

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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 article we consider whether trade liberalisation in 17 countries of Latin America has improved the trade-off between gross domestic product (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 17 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.

Item Type: Article
Uncontrolled keywords: Latin America, trade liberalisation, growth, balance of payments.
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculties > Social Sciences > School of Economics
Depositing User: Tony Thirlwall
Date Deposited: 28 Jul 2008 08:44
Last Modified: 10 Jun 2014 07:54
Resource URI: (The current URI for this page, for reference purposes)
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