Graduate Thesis Or Dissertation
 

Trade openness and productivity in Latin American countries : a DEA analysis

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https://ir.library.oregonstate.edu/concern/graduate_thesis_or_dissertations/x346d6540

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  • The relationship between a country's degree of openness and its economic well-being has been examined extensively both theoretically and empirically. Numerous empirical studies using different openness measures have found a positive effect of openness on growth. However, the validity of such measures have come into question due to data issues. This paper uses a two stage method to analyze the relationship between productive efficiency and trade openness in seventeen Latin American and 24 OECD countries over 25 years. In the first stage, the "output-oriented Malmquist index", developed by Fare, Grosskopf, and Roos (1998) is calculated through Data Envelopment Analysis (DEA). Through use of bootstrapping techniques I find that 86% of the calculated Malmquist indices are statistically significant. In the second stage, these indices are regressed on a vector of country characteristics, including changes in trade openness. Somewhat surprisingly, I find a negative correlation between changes in openness and changes in productivity for both Latin American and OECD countries.
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