Trade Openness, Growth and Income Inequality: Case of Tunisia, an ARDL and PMG/ARDL Approach
Keywords:
economic growth, income inequality, trade openness, Tunisia, panel data
Abstract
Trade openness has long been a major topic of debate, mainly because of the countless effects it can have on countries, particularly in terms of growth and wealth. While some see it as an efficient catalyst for growth, others claim that it contributes to the polarization of wealth without generating inclusive economic growth, resulting in the marginalization of the poorest social classes.
For the Tunisian case, our analysis using an ARDL model as well as a PMG/ARDL model, allowed us to conclude that trade openness has a positive effect on economic growth. We were also able to detect a negative effect on wage inequalities within the various sectors that constitute the Tunisian economy, in line with the predictions of the traditional theories on the impact of trade openness in developing countries.
References
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Solow, R. (1957). Technical Change and the Aggregate Production Function. The Review of Economics and Statistics, 39(3), 312-320.
Tanzi, V. & Zee, H. (1997). Fiscal Policy and Long-Run Growth. IMF Econ Rev, 44, 179–209.
Williamson, J. (1990). The Impact of the Corn Laws Just Prior to Repeal. Explorations in Economic History, 27(2), 123-156.
Young, A. (1991). Learning by Doing and the Dynamic Effect of International Trade. The Quarterly Journal of Economics, 106(2), 396-405.
Alesina, A. & Drazen, A. (1991). Why are Stabilizations Delayed? American Economic Review, 81(5), 1170-1188.
Alesina, A. & Perotti, R. (1996). Income Distribution, Political Instability, and Investment. European Economic Review, 40, 1203-1228.
Autor, D. H., Katz, L. F., & Kearney, M. S. (2008). Trends in US wage inequality: Revising the revisionists. The Review of Economics and Statistics, 90(2), 300-323.
Bernardin, S. et al. (2018). The effect of external debt on economic growth in Sub-Saharan Africa. International Journal of Business and Economic Sciences Applied Research (IJBESAR), 11, 61-69.
Breitung, J.M. (2000). The local power of some unit root tests for panel data. In: B.H. Baltagi (Ed.), Nonstationary panels, panel cointegration, and dynamic panels (pp. 161-177). Elsevier, Amsterdam.
Dickey, D. & Fuller, W. (1981). Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root. Econometrica, 49, 1057-1072.
Dowrick, S. & Gemmell, N. (1991). Industrialisation, Catching Up and Economic Growth: A Comparative Study Across the World's Capitalist Economies. Economic Journal, 101(405), 263-275.
Durlauf (1996). A Theory of Persistent Income Inequality. Journal of Economic Growth, 1, 75-93.
El Bekri, F. (2000). Disparités Régionales et Développement en Tunisie. Revue d'Économie Régionale et Urbaine, 5, 887-914.
Fernandez, R. & Rodrik, D. (1991). Resistance to Reform: Status Quo Bias in the Presence of Individual-Specific Uncertainty. American Economic Review, 81(5), 1146-1155.
Fosu, A.K. (1996). The Impact of External Debt on Economic Growth in Sub-Saharan Africa. Journal of Economic Development, 21(1), 93-118.
Grossman, G. & Helpman, E. (1991). Quality Ladders in the Theory of Growth. The Review of Economic Studies, 58(1), 43-61.
Hadri, K. (2000). Testing for stationarity in heterogeneous panel data. Econometrics Journal, 3, 148-161.
Im, K.S., Pesaran, M.H. & Shin, Y. (2003). Testing for unit roots in heterogeneous panels. Journal of Econometrics, 115, 53-74.
Jones, D. C., & Cheng, L. (2003). Growth and regional inequality in China during the reform era. China Economic Review, 14(2), 186-200.
Kao, C. (1999). Spurious regression and residual-based tests for cointegration in panel data. Journal of Econometrics, 90, 1-44.
Keller, W. (1996). Trade and the Transmission of Technology, Development and Comp Systems. 9609001, University Library of Munich, Germany.
Kholis, M. (2012). Dampak foreign direct investment terhadap pertumbuhan ekonomi Indonesia; Studi makroekonomi dengan penerapan data panel. Jurnal Organisasi dan Manajemen, 8(2), 111-120.
Levin, A., Lin, C. F., & Chu, C. S. J. (2002). Unit root tests in panel data: asymptotic and finite-sample properties. Journal of Econometrics, 108(1), 1-24.
Lin, J. & Liu, Z. (2000). Fiscal Decentralization and Economic Growth in China. Economic Development and Cultural Change, 49(1), 1-21.
Mankiw, N. G., Romer, D., & Weil, D. N. (1992). A contribution to the empirics of economic growth. The Quarterly Journal of Economics, 107(2), 407-437.
Mogoe, S. & Mongale, P. (2014). The Impact of International Trade on Economic Growth in South Africa: An Econometrics Analysis. Mediterranean Journal of Social Sciences, 5(14).
Munshi, F. (2012). Does openness reduce wage inequality in developing countries? Panel data evidence from Bangladesh. The Singapore Economic Review, 57(2), 1250012.
Pedroni, P. (1999). Critical values for cointegration tests in heterogenous panels with multiple regressors. Oxford Bulletin of Economics and Statistics, 61(S1), 653-670.
Pesaran, M. H., Shin, Y., & Smith, R. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16, 289-326.
Pesaran, M. H. & Shin, Y. (1998). An Autoregressive Distributed-Lag Modelling Approach to Cointegration Analysis. Econometrics and Economic Theory in the 20th Century: The Ragnar Frisch Centennial Symposium, 31, 371-413.
Pesaran, M. H., Shin, Y. & Smith, R. P. (1999). Pooled Mean Group Estimation of Dynamic Heterogeneous Panels. Journal of the American Statistical Association, 94, 621-634.
Phillips, P.C.B. & Perron, P. (1988). Testing for a Unit Root in Time Series Regression. Biometrika, 75, 335-346.
Ricardo, D. (1819). (1949). The Principles of Political Economy and Taxation. London.
Rivera-Batiz, L. & Romer, P. (1991). Economic Integration and Endogenous Growth. The Quaterly Journal of Economic, 106, 531-556.
Smith, A. (1776). (1904). An Inquiry into the Nature and Causes of the Wealth of Nations.
Solow, R. (1957). Technical Change and the Aggregate Production Function. The Review of Economics and Statistics, 39(3), 312-320.
Tanzi, V. & Zee, H. (1997). Fiscal Policy and Long-Run Growth. IMF Econ Rev, 44, 179–209.
Williamson, J. (1990). The Impact of the Corn Laws Just Prior to Repeal. Explorations in Economic History, 27(2), 123-156.
Young, A. (1991). Learning by Doing and the Dynamic Effect of International Trade. The Quarterly Journal of Economics, 106(2), 396-405.
Published
2024-09-16
How to Cite
BEN YOUNES, H., & BEN AMEUR, F. (2024). Trade Openness, Growth and Income Inequality: Case of Tunisia, an ARDL and PMG/ARDL Approach. European Journal of Science, Innovation and Technology, 4(4), 167-181. Retrieved from https://ejsit-journal.com/index.php/ejsit/article/view/501
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Copyright (c) 2024 Hamza BEN YOUNES, Fayçal BEN AMEUR
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