**Table 3. Trade openness, diversification and growth: Augmented Specification** _Dependent Variable: Growth of real GDP per worker (5‐year averages) Estimation method: GMM‐IV_ _<u>System Estimator (Arellano and Bover, 1995; Blundell and Bond 1998)</u>_

||[1]|[2]|[3]|[4]|[5]|[6]|[7]|[8]|
|---|---|---|---|---|---|---|---|---|
|**Convergence**|||||||||
|Initial GDP per worker|-0.024<sup>***</sup>|-0.025<sup>***</sup>|-0.019<sup>***</sup>|-0.022<sup>***</sup>|-0.018<sup>***</sup>|-0.020<sup>***</sup>|-0.017<sup>***</sup>|-0.019<sup>***</sup>|
|_(in logs)_|_(0.000)_|_(0.000)_|_(0.000)_|_(0.000)_|_(0.000)_|_(0.000)_|_(0.000)_|_(0.000)_|
|_Trade Openness_|||||||||
|<br>Exports and Imports|0.019<sup>***</sup>|0.007<sup>***</sup>|0.021<sup>***</sup>|0.013<sup>***</sup>|0.021<sup>***</sup>|0.014<sup>***</sup>|0.020<sup>***</sup>|0.014<sup>***</sup>|
|_(% of GDP, logs)_|_(0.000)_|_(0.000)_|_(0.000)_|_(0.000)_|_(0.000)_|_(0.000)_|_(0.000)_|_(0.000)_|
|**Trade Diversification**|||||||||
|Market concentration|0.002<sup>***</sup>|0.011<sup>***</sup>|0.0002|0.006<sup>***</sup>|-0.002<sup>***</sup>|0.004<sup>***</sup>|-0.001|0.005<sup>***</sup>|
|_(Herfindahl index)_|_(0.000)_|_(0.000)_|_(-0.803)_|_(0.000)_|_(0.000)_|_(0.000)_|_(-0.143)_|_(0.000)_|
|<br>Product concentration|<br>-0.014<sup>***</sup>|<br>-0.010<sup>***</sup>|<br>-0.020<sup>***</sup>|<br>-0.015<sup>***</sup>|<br>-0.018<sup>***</sup>|<br>-0.014<sup>***</sup>|<br>-0.018<sup>***</sup>|<br>-0.015<sup>***</sup>|
|_(Herfindahl index)_|_(0.000)_|_(0.000)_|_(0.000)_|_(0.000)_|_(0.000)_|_(0.000)_|_(0.000)_|_(0.000)_|
|**Natural Resource Exports**|||||||||
|Natural resource exports|..|0.008<sup>***</sup>|..|0.006<sup>***</sup>|..|0.004<sup>***</sup>|..|0.005<sup>***</sup>|
|_(% of GDP)_||_(0.000)_||_(0.000)_||_(0.000)_||_(0.000)_|
|<br>Natural resource exports|..|<br>-0.023<sup>***</sup>|..|<br>-0.019<sup>***</sup>|..|<br>-0.016<sup>***</sup>|..|<br>-0.015<sup>***</sup>|
|<br>_(% of total exports)_||_(0.000)_||_(0.000)_||_(0.000)_||_(0.000)_|
|**Additional Growth Drivers**|||||||||
|Secondary enrollment rate|0.006<sup>***</sup>|0.004<sup>***</sup>|0.004<sup>***</sup>|0.003<sup>***</sup>|0.004<sup>***</sup>|0.004<sup>***</sup>|0.004<sup>***</sup>|0.002<sup>*</sup>|
|_(initial level, logs)_|_(0.000)_|_(0.000)_|_(0.000)_|_(-0.001)_|_(0.000)_|_(0.000)_|_(0.000)_|_(-0.035)_|
|ICRG Political risk index|0.006<sup>***</sup>|0.005<sup>***</sup>|0.006<sup>***</sup>|0.006<sup>***</sup>|0.006<sup>***</sup>|0.006<sup>***</sup>|0.006<sup>***</sup>|0.006<sup>***</sup>|
|_(principal components)_|_(0.000)_|_(0.000)_|_(0.000)_|_(0.000)_|_(0.000)_|_(0.000)_|_(0.000)_|_(0.000)_|
|<br>Credit to private sector|<br>..|<br>..|<br>-0.013<sup>***</sup>|<br>-0.011<sup>***</sup>|<br>-0.012<sup>***</sup>|<br>-0.011<sup>***</sup>|<br>-0.011<sup>***</sup>|<br>-0.011<sup>***</sup>|
|_(% of GDP)_|||_(0.000)_|_(0.000)_|_(0.000)_|_(0.000)_|_(0.000)_|_(0.000)_|
|General government consumption|..|..|..|..|-0.008<sup>***</sup>|-0.006<sup>***</sup>|-0.007<sup>***</sup>|-0.005<sup>**</sup>|
|_(% of GDP)_|||||_(0.000)_|_(-0.001)_|_(0.000)_|_(-0.003)_|
|Growth volatility|..|..|..|..|..|..|-0.086<sup>***</sup>|-0.102<sup>***</sup>|
|_(S.D. growth per worker)_|||||||_(0.000)_|_(0.000)_|
|Constant|0.118<sup>***</sup>|0.178<sup>***</sup>|0.095<sup>***</sup>|0.155<sup>***</sup>|0.100<sup>***</sup>|0.151<sup>***</sup>|0.105<sup>***</sup>|0.146<sup>***</sup>|
||_(0.000)_|_(0.000)_|_(0.000)_|_(0.000)_|_(0.000)_|_(0.000)_|_(0.000)_|_(0.000)_|
|**Observations**|624|613|616|606|611|601|611|601|
|AR(1)|0.000|0.000|0.000|0.000|0.000|0.000|0.000|0.001|
|<br>AR(2)|0.721|0.472|0.880|0.638|0.851|0.570|0.483|0.252|
|Hansen|0.392|0.411|0.388|0.407|0.419|0.347|0.349|0.349|

_p_ -values in parentheses * _p_ < 0.05, ** _p_ < 0.01, *** _p_ < 0.001 We next examine the channels of transmission of integration trade integration on growth; that is, we assess the impact of the different indicators of trade volume, trade diversification, and natural resource exports on the sources of growth —namely, growth of physical capital per worker and total factor productivity (TFP) growth. Table 4 presents the impact of the international trade integration variables on growth per worker as well as on its sources (physical capital per worker growth and TFP per worker growth). Note that the specification of the regressions in Table 4 follows that of regressions [3] and [5] in Table 2. The first three columns of Table 4 reproduce the growth per worker regression from column [3] of Table 2 and estimates the same specification for growth in capital per worker and TFP growth. The remaining three columns of Table 4 repeat the same analysis for the specification in column [5] of Table 2. Note that the only difference in the estimation of columns [4]-[6] relative to columns [1]-[3] is the inclusion of growth volatility as an additional explanatory variable.

_page 21_