What is the relationship between trade and economic growth? Due to the ambiguity of the relationship between trade and growth, the empirical relationship remains open (Rodriguez & Rodrik 2001, Baldwin, 2003). This paper introduces 'trade structure' variables, borrowing from the structure-conduct-performance (SCP) paradigm of Industrial Organization literature, and applying them to the relationship. A dynamic panel estimation for the data of 66 countries during 1991-2001 is used to verify the validity and robustness of the relationship. Trade structure variables that represent Heckscher-Ohlin model and Product Differentiation model respectively show strong evidence of positive effects on growth. This paper concludes that trade structures, not trade, well explain growth. (The rest is omitted.)

Executive Summary

I. Introduction

II. Trade Structure and Growth
1. Use of Trade Structure
2. Three Models linking Trade to Growth
3. Trade Structure Variables

III. Empirical Analysis
1 Estimation Method
2. Data
3. Results

IV. Conclusion

References

Appendix