Structural reforms and growth in developing countries

Abstract

This paper investigates the effects of structural reforms on real per capita GDP in the short and long-run by employing Pooled Mean Group approach. I find that during the period 1973–2006, there is a positive long-run relationship between international trade reform, financial (capital account, and domestic finance) reforms and real per capita GDP. My results also indicate that in the short-run, financially more open economies suffer more from international trade and domestic financial reforms. More importantly, the adverse effects of reforms in the short-run can be mitigated by improving property rights and contract enforcement.