Sebastian Edwards analyzes the relationship between openness, productivity growth, and economic performance using a new comparative dataset for 93 countries. He investigates whether more open economies experience faster productivity growth (TFP) and finds that the relationship is robust across different measures of openness, estimation techniques, time periods, and functional forms. The results suggest that more open countries have indeed experienced faster productivity growth. However, the paper acknowledges that causality remains an open question and requires further time series analysis. The paper reviews the measurement of trade orientation and openness, noting that previous studies have struggled with data limitations and the difficulty of constructing a single, reliable indicator of openness. Edwards uses nine alternative indexes of trade policy to assess the relationship between openness and TFP growth. These include measures of trade policy-induced distortions, such as average black market premiums, import tariffs, and coverage of non-tariff barriers. Edwards finds that the relationship between openness and TFP growth is positive, with more open economies experiencing faster productivity growth. The results are robust to alternative measures of openness and are consistent across different estimation methods. However, the paper also highlights that other factors, such as human capital and macroeconomic stability, play important roles in explaining cross-country differences in TFP growth. The paper also examines the potential influence of outliers and nonlinearities in the relationship between openness and TFP growth. It finds that the results are not significantly affected by the inclusion of outliers, and that the relationship appears to hold over longer time periods. The study concludes that while the findings support the idea that openness is positively associated with productivity growth, further research is needed to fully understand the mechanisms behind this relationship.Sebastian Edwards analyzes the relationship between openness, productivity growth, and economic performance using a new comparative dataset for 93 countries. He investigates whether more open economies experience faster productivity growth (TFP) and finds that the relationship is robust across different measures of openness, estimation techniques, time periods, and functional forms. The results suggest that more open countries have indeed experienced faster productivity growth. However, the paper acknowledges that causality remains an open question and requires further time series analysis. The paper reviews the measurement of trade orientation and openness, noting that previous studies have struggled with data limitations and the difficulty of constructing a single, reliable indicator of openness. Edwards uses nine alternative indexes of trade policy to assess the relationship between openness and TFP growth. These include measures of trade policy-induced distortions, such as average black market premiums, import tariffs, and coverage of non-tariff barriers. Edwards finds that the relationship between openness and TFP growth is positive, with more open economies experiencing faster productivity growth. The results are robust to alternative measures of openness and are consistent across different estimation methods. However, the paper also highlights that other factors, such as human capital and macroeconomic stability, play important roles in explaining cross-country differences in TFP growth. The paper also examines the potential influence of outliers and nonlinearities in the relationship between openness and TFP growth. It finds that the results are not significantly affected by the inclusion of outliers, and that the relationship appears to hold over longer time periods. The study concludes that while the findings support the idea that openness is positively associated with productivity growth, further research is needed to fully understand the mechanisms behind this relationship.