The Growth Effects of Import Restrictions and Export Regulatory Measures: Evidence from Dynamic Panel Data

This study examines the relationship between trade restrictions and economic growth, with a particular focus on the moderating role of governance. Using dynamic panel data of the two-step system generalised method of moments for 125 countries from 2010 to 2022, the analysis differentiates between import restrictions and export regulatory measures. Results reveal that import restrictions, particularly tariffs, licences, and state import monopolies, negatively affect economic performance, while export repatriation and financing requirements contribute positively to growth. At the aggregate level, trade restrictions exhibit an overall negative association with growth, and stronger governance, although generally beneficial, tends to magnify the adverse effects of such restrictions. These findings highlight important policy implications: easing import restrictions through tariff reductions, licensing reforms, and dismantling monopolies, enhancing export financing and ensuring effective repatriation of export proceeds, and strengthening governance through improved regulatory quality, transparency, and institutional effectiveness to ensure trade policies foster sustainable economic growth.