Trade, openness and growth – Do open countries grow faster?

Progressive liberalization of trade in the contemporary period can be illustrated by a raise in annual growth of exports (between 1970 and 2001: 5, 1%). But if it seems obvious that there is a link between both, nothing can prove that is openness which brings about growth and not the contrary, or that exists an interdependence between the two phenomena. In that case openness accompanies growth without being the first cause. Asian countries that know a quick growth (Korea, Taiwan, Hong-Kong, Singapore) experienced a progressive openness. Thus can we assume that openness is the only cause of their development? In order to point out the driving function that represents international trade in the economic growth of one country we will look at two prosperous periods: The Industrial Revolution and the Growth of post-war years (1945-1973).

And the real question that we have to keep in mind is: How can international trade stimulate and feed economic growth?

Paul Bairoch established a comparison between GNB and the European exports. This study about Germany, Belgium, Denmark, France, Italia, Norway and United Kingdom represents 60% of European GNB in 1880 and 70%

Donations 48%

American help for Western Europe (1947-1955)

Lastly, we must question the importance of the Marshall Plan. Though it played a big role in the modernization of European industry, this trend had partly begun during the interwar period. Moreover, we must recognize that this plan has some institutional consequences because it introduced European cooperation at the economic level. In 1948, OEEC was created and became OECD in 1961.

Indeed, the transfers of labor undeniably played a positive part in the growth. Paul Bairoch considers for example that the migrants and theirs direct descendants supplied 40% of the American labor between 1870 and 1914. This is the factor of labor that played a major role in the raise in GNP.

From the economic viewpoint, the Marshall plan was an effort by the U.S. to help the enactment of structural reforms in the world economy, starting with those countries most impoverished. Furthermore, the U.S. wanted to be in concordance with institutions from the Bretton Woods agreement such as the IMF and IBRD. But, American help was motivated by self-interest. At that time the American people were convinced that their prosperity depended on the economic situation of the rest of the world. Also, in transferring money from America to Europe there were two main vested interests for the U.S.: First, to encourage investments thus boosting the economies of belligerent countries, and secondly, to preserve the rate of American exports. However, the dominant motivations for the Marshall plan were political, and can be traced back to the hardening of relations between the USA and USSR. This aid was refused by Stalin and subsequently, under Soviet pressure, by all Socialist states.

Some topics in this essay:
Marshall Plan, Finally Russian, European GDP, , Product Moreover, GNB Volume, Sachs Warner, War II, Western Europe, Kuisel French, international trade, marshall plan, economic growth, world war, openness growth, direct investments, theory comparative advantages, growth rate, european exports, economic development, growth cause, growth paul bairoch, link openness growth,