Date of Award

May 2016

Degree Type

Dissertation

Degree Name

Doctor of Philosophy

Department

Economics

First Advisor

Hamid Mohtadi

Committee Members

Narayan K. Kishor, Rebecca Neumann, Itziar Lazkano

Keywords

Financial Crisis, Growth and Development, International Finance, International Trade, Risk

Abstract

ABSTRACT

ESSAYS ON GROWTH AND DEVELOPMENT: AN INTERNATIONAL ECONOMICS PERSPECTIVE

by

Uchechukwu A. Jarrett

The University of Wisconsin-Milwaukee, 2016

Under the Supervision of Professor Hamid Mohtadi

The title of this dissertation captures the intent of this study. It centers on aspects of international trade and finance and their impact on growth and development. The effect of openness on the financial crisis of 2008 which wreaked havoc worldwide on financial and non-financial systems alike is examined. It is observed that the role of both financial and trade openness is not constant throughout the crisis as was once thought. In addition, and contrary to popular belief, the effect of trade openness dominated that of financial openness, suggesting that while a shortcoming in the financial markets may have been to blame for the origin of the crisis, the negative consequences were spread through trade channels. Due to the increase in risk during this time period and the deleterious effects trade openness had on economies the world over, the role of risk in trade flow determination is studied. It is determined that risk has a significant impact on trade flow determination and as such, has a significant impact on growth rates across different countries, with developing countries suffering more due to a higher level of risk than their developed counterparts. This dissertation can thus be divided into two subsets. The first of these subsets, which is entirely discussed in the first chapter, takes a unique look at the effect of openness, both via trade and finance on an economy, paying particular attention to a period in time during great recession of 2008 where we know that the detriments of openness were felt the world over. The second subset deals with factors that influence a country’s choice in trading partners, specifically country specific risk. This is studied by introducing countries’ idiosyncratic risk measures to the standard gravity model in order to determine what role risk plays in determining trade partnerships. This aspect is addressed in the second chapter while the third chapter examines the implication of this finding on growth rates. The implication of these factors on the growth rate of the economy through this trade nexus is studied in order to provide a more accurate estimate of the contribution of trade to growth rates and propose a reason for differences in success rates of trade expansionary policies designed to promote growth, particularly in developing countries.

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