Key points
- Openness can influence economic growth through its impact on the supply
of labour via net immigration or migration; by changing the supply of capi-
tal through inward FDI; or the drain of surplus through capital flight;
through changing the incentives to invest; or through influencing produc-
tivity. - Patterns of openness have in general shown a ‘U’ shape, increasing in the
late nineteenth century, declining between around1913 and 1950, then
increasing again, generally reaching new heights by the 1990s. - The two most common explanations for changing patterns of openness are
policy and technology. - There has been an extensive theoretical and empirical debate about the
impact of trade liberalization. Some of this is rooted in the theory of
comparative advantage, but many other ideas are also included. - The influence of openness is potentially far more general and openness can
encompass power and ideas, and can transform people’s living conditions.
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