The <scp>trade?GDP</scp> ratio as a measure of openness

The ratio of trade to GDP is often used as a summary measure country's openness the rest world. It well known that trade-GDP affected by relatively time-invariant factors, such country size and remoteness from trading partners, can largely be controlled for in cross-country panels using fixed effects. shown here there are also other important, time-varying influences on have been little investigated, prices commodity exports imports, real effective exchange rate investment GDP. These factors significant, not only short run, need taken into account estimating long-run effects transport costs or policy trade/GDP ratio.