Date of Award

Spring 1-1-2010

Document Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

Economics

First Advisor

Robert F. Mc Nown

Second Advisor

Francisca Antman

Third Advisor

Frank S.T. Hsiao

Abstract

This thesis tries to enhance our understanding of the role of trade liberalization as it relates to economic growth and the factors affecting trade liberalization in various countries. In addition, this thesis deals with the problem of endogeneity with various econometric methods.

Chapter 2 presents a study of the impact of trade liberalization policy on economic growth with the simultaneous application of privatization policy in 25 transitional countries. The analysis applies two stage least squares (2SLS) to panel data from 1994 to 2006 for these 25 countries. The estimated results provide evidence of a significantly positive effect of both trade liberalization and privatization on economic growth, when controlling for political conflict and macroeconomic stability.

Chapter 3 emphasizes the political economy of trade protection by examining the role of lobbying as it relates to trade liberalization in the United States. I test the Grossman-Helpman model (1994) for a US annual panel data set including 193 four-digit SIC 87 US industries over the time period between 1997 and 2001 by applying a simultaneous three equation system. The effective rate of protection (ERP) is for the measure of trade protection. The estimated results offer support for the Grossman and Helpman model (1994). However, lobbying has a weak effect on trade protection. iv

Chapter 4 analyzes the impact of trade liberalization on economic growth for Malaysia and South Korea. A four variable vector autoregression (VAR) is used to study the relationships between trade, foreign direct investment (FDI) and economic growth over the time period from 1970 to 2004 (for Malaysia) and from 1976 to 2007 (for Korea). The differences in the estimated results are explained by the differences in the economic policies between the two countries. Although both countries implemented policies of export-orientated industrialization, the Malaysian government promoted foreign direct investment (FDI) as a tool of industrialization, while the Korea government built an “integrated national economy” using “chaebol” industrial structures and minimizing the role of FDI.

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