School of Economics

2002 Discussion Papers

School of Economics Discussion Paper 02/02
April 2002

Trade Liberalisation and the Balance of Payments in Selected Developing Countries
Amelia U. Santos-Paulino

School of Economics
University of Kent at Canterbury

Abstract

This paper analyses the impact of the reduction of tariff and non-tariff barriers on the trade balance and the current account of the balance of payments of 22 selected developing countries from Africa, Latin America, East Asia, and South Asia. The study presents estimates of dynamic panel data models and time-series/cross-section models. The main findings are that trade liberalisation has worsened the balance of trade and the balance of payments, because imports have increased more rapidly than exports. However, the impact of liberalisation and other variables varies according to region and the nature of the trade policy regime.

JEL Classification: C21, C22, C23, F13, F14, F32

Keywords: trade liberalisation, balance of payments, dynamic panel data, time series/cross section, developing countries

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