Assessing Economic Liberalization Episodes: A Synthetic Control Approach

Review of Economics and Statistics - 95 (2013), 983-1001

joint with Andreas Billmeier

We use transparent statistical methodology for data driven case studies -the synthetic control method- to investigate the impact of economic liberalization on real GDP per capita in a worldwide sample of countries. Economic liberalization is measured by a widely used indicator that captures the scope of the market in the economy. The methodology compares the post-liberalization GDP trajectory of treated economies with the trajectory of a combination of similar but untreated economies. We find that liberalizing the economy had a positive effect in most regions, but more recent liberalizations, in the 1990s and mainly in Africa, had no significant impact.