The Impact of Trade Liberalization on the Import Growth: Evidence from Four Recently Acceded Members of WTO

Ethan Lemaitre

Abstract


This paper intends to show that trade liberalization has had a notable effect on the import growth of four developing countries that have joined the WTO in the year 2000: Albania, Georgia, Jordan and Oman. The Random Effects (RE) estimator, the Fixed Effects (FE) estimator and the Generalized Method of Moments (GMM) have been applied to the panel data models and a negative coefficient has resulted for the tariffs imposed on the imports, which confirms that tariff barriers and import growth move in different directions. The results also indicate that joining the WTO and growth in domestic income have a positive effect on the import growth, while both real effective exchange rate and foreign exchange reserves have negative effects on the import growth. Therefore, trade liberalization can be an effective policy for increasing the import growth in the selected developing countries.


Keywords


Trade liberalization; Import growth; Random effects; fixed effects; GMM.

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References


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