Correcting the size bias in trade openness and globalization measures

Tang, Kam Ki (2011) Correcting the size bias in trade openness and globalization measures. Global Economy Journal, 11 3: 3.1-3.24. doi:10.2202/1524-5861.1751

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Author Tang, Kam Ki
Title Correcting the size bias in trade openness and globalization measures
Journal name Global Economy Journal   Check publisher's open access policy
ISSN 1553-5304
Publication date 2011-09
Sub-type Article (original research)
DOI 10.2202/1524-5861.1751
Open Access Status File (Publisher version)
Volume 11
Issue 3
Start page 3.1
End page 3.24
Total pages 24
Place of publication Berkeley, CA, United States
Publisher Berkeley Electronic Press
Collection year 2012
Language eng
Abstract The trade intensity index, constructed as exports plus imports divided by GDP, is the most commonly used measure for trade openness and globalization. The index tends to indicate small countries are more open than large countries. We show that it is the inconsistence of two implicit assumptions in the index that leads to a size bias in the openness measurement. We use a combination of axiomatic and parametric methods to derive an unbiased, generalized index that embodies the conventional index as a special case. Correcting the size bias leads to very different results in relative openness measures between countries and in the estimates of the growth effect of trade openness.
Keyword Trade
measurement development
Q-Index Code C1
Q-Index Status Confirmed Code
Institutional Status UQ

Document type: Journal Article
Sub-type: Article (original research)
Collections: Official 2012 Collection
School of Economics Publications
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Created: Mon, 29 Aug 2011, 11:17:14 EST by Alys Hohnen on behalf of School of Economics