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  • Essay / Openness, Trade and Growth - 1085

    The history of economic growth is as long as the history of economic thought. Since early classics like Adam Smith, David Ricardo and Thomas Malthus have studied the question of growth or introduced fundamental concepts such as diminishing returns and their relationship to the accumulation of physical or human capital, the relationship between technological progress and work specialization or even competitive analysis. dynamic balance tool. Within the framework of these theories, it appears that the relationship between trade openness and economic growth is positive. These theories between trade openness and economic growth are more than 200 years away, with mercantilist theories. According to these concepts, international trade only benefited one nation if the other was harmed. In 1776, Adam Smith broke with this theory by asserting that if two nations voluntarily traded with each other, both benefited. This is based on “absolute advantage”. Later, David Ricardo (1817) stated that even if one nation was less efficient than another in producing both goods, it was still likely to trade in a mutually beneficial manner. This essay attempts to show the relationship between trade openness and economic growth and explain their implications for Paraguay. There are many views on the relationship between economic growth and trade, but all authors suggest that there is a beneficial situation. For example, Yuhong Li, Zhongwen Chen, Xiaoyin Wang (2010) conclude that in open economies, the development of foreign trade has a considerable impact on GDP growth. According to Douglas K. Agbetsiafa “Opening the economy to international trade promotes economic development and growth while growth itself leads to an associated increase in openness to trade” (p....... middle of article...... Openness to trade has been a topic of debate in the literature in recent years because of its effect on growth Some authors argue that openness to trade is positive because it enables. to diversify the supply and supply of goods and services in times of emergency The other position assumes that trade liberalization does not imply any benefits because all quickly internalize the external shock structure of agricultural exports and product dependence. Paraguay must make ever increasing efforts to receive the same amount of revenue while the increase in the volume of exports was greater than the value Much of the current debate on the impact of trade on growth concerns Paraguay. , given that trade has been liberalized, but public policies are needed to support the development of related institutional factors..