Industry, Foreign Trade and Development: Econometric Models of Europe and North America, 1965-2003

We compare several econometric models of Western Europe, Central Europe, the United States, Canada and Mexico in order to analyze the impact of foreign trade and industry on development Regarding the positive effects of foreign trade it is important to notice that they are more due to the positive role of imports from the supply side than to the effect of exports from the demand side, although both sides are relevant. The main benefit from increasing exports is usually to increase the capacity to import intermediate inputs and other goods and services which are necessary or help to foster economic development in the domestic market. There are many studies which show the positive effects of exports but very few focused on the role of imports, and this study contributes in this regard.. On the other hand the analysis of industrial contribution to the non industrial sectors is twofold: directly providing intermediate and capital goods to non industrial sectors and indirectly increasing exports and the capacity to import foreign inputs which contribute to domestic production.