A Link Between Trade and Growth Sachs and Warner: 1970 to 1990 study Open economy developing countries grew 4.49%/year Closed economy developing countries grew 0.69%/year Open economy developed countries grew 2. 29%/year Closed economy developed countries grew 0.74%/year Frankel and Romer On average, a one percentage point increase in the ratio of a country's trade to its GDP increases income/person by at least 0.57. For every 10% increase in the importance of international trade in an economy, average income levels will rise by at least 57. McGraw-HillIrwoin @2003 The McGraw-Hill Companies, Inc, All Rights Reserved.McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. 4-5 A Link Between Trade and Growth Sachs and Warner: 1970 to 1990 study Open economy developing countries grew 4.49%/year. Closed economy developing countries grew 0.69%/year. Open economy developed countries grew 2.29%/year. Closed economy developed countries grew 0.74%/year. Frankel and Romer: On average, a one percentage point increase in the ratio of a country’s trade to its GDP increases income/person by at least 0.5%. For every 10% increase in the importance of international trade in an economy, average income levels will rise by at least 5%