This paper by Sebastian Edwards examines the relationship between trade policy, openness, and total factor productivity (TFP) growth. The author reviews the historical debate on the impact of trade liberalization on economic performance and highlights two key issues: the lack of theoretical models linking trade policy to faster equilibrium growth, and the empirical literature's reliance on flawed data. Using a new comparative dataset for 93 countries, Edwards employs nine alternative measures of trade policy to analyze the robustness of the relationship between openness and TFP growth. The findings suggest that more open countries have experienced faster productivity growth, with the relationship being consistent across different openness indicators and estimation techniques. However, the paper acknowledges that issues related to causality remain open and require further time series analysis. The results support the idea that trade liberalization can positively affect economic growth, but the role of other factors such as institutions, politics, and macroeconomic stability is also explored. Overall, the paper provides strong evidence for the positive impact of openness on TFP growth, although it emphasizes the need for more detailed microeconomic studies to fully understand the economics of innovation and productivity growth.This paper by Sebastian Edwards examines the relationship between trade policy, openness, and total factor productivity (TFP) growth. The author reviews the historical debate on the impact of trade liberalization on economic performance and highlights two key issues: the lack of theoretical models linking trade policy to faster equilibrium growth, and the empirical literature's reliance on flawed data. Using a new comparative dataset for 93 countries, Edwards employs nine alternative measures of trade policy to analyze the robustness of the relationship between openness and TFP growth. The findings suggest that more open countries have experienced faster productivity growth, with the relationship being consistent across different openness indicators and estimation techniques. However, the paper acknowledges that issues related to causality remain open and require further time series analysis. The results support the idea that trade liberalization can positively affect economic growth, but the role of other factors such as institutions, politics, and macroeconomic stability is also explored. Overall, the paper provides strong evidence for the positive impact of openness on TFP growth, although it emphasizes the need for more detailed microeconomic studies to fully understand the economics of innovation and productivity growth.