Do more open countries have a higher growth rate but more inequality?

Abstract

While other researchers have examined the effect of outward orientation on economic growth, this paper examines the relationship between outward orientation and 21 measures of economic development using data from 88 developing countries. An attempt is made to answer the question: Does outward orientation result in positive economic growth at the expense of higher income inequality, a higher poverty rate, and other harmful effects on economic development measures? The results show that there is, in the net, a positive correlation between openness and measures of economic development. Second, while outward orientation affects economic growth positively and the higher economic growth in turn leads to a higher level of economic development, there is weak evidence that there are additional direct, negative effects of outward orientation on economic development measures.

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Eusufzai, Z. Do more open countries have a higher growth rate but more inequality?. Atlantic Economic Journal 26, 32–43 (1998). https://doi.org/10.1007/BF02298369

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Keywords

  • Growth Rate
  • Economic Growth
  • Economic Development
  • High Income
  • High Growth