03 Oct 2013

How much did China’s WTO accession increase economic growth in resource-rich countries?

Thomas Barnebeck Andersen / Mikkel Barslund / Casper Worm Hansen / Thomas Harr / Peter Sandholt Jensen

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This Working Document provides an estimate of China’s impact on the growth rate of resource-rich countries since its WTO accession in December 2001. The authors’ empirical approach follows the logic of the differences-in-differences estimator. In addition to temporal variation arising from the WTO accession, which they argue was exogenous to other countries’ growth trajectories, the authors exploit spatial variation arising from differences in natural resource wealth. In this way they can compare changes in economic growth in the pre- and post-accession periods between countries that benefited from the surge in demand for industrial commodities brought about by China’s WTO accession and countries that were less able to do so. They find that that roughly one-tenth of the average annual post-accession growth in resource-rich countries was due to China’s increased appetite for commodities. The authors use this finding to inform the debate about what will happen to economic growth in resource-rich countries as China rebalances and its demand for commodities weakens.

Authors: Thomas Barnebeck Andersen, Department of Business and Economics, University of Southern Denmark; Mikkel Barslund, Centre for European Policy Studies, Belgium; Casper Worm Hansen, Department of Economics, Aarhus University, Denmark; Thomas Harr, Standard Chartered Bank, Singapore; Peter Sandholt Jensen, Department of Business and Economics, University of Southern Denmark.