15.02.10 Trade and growth – again
NUPI Working Paper 771 | 23 pages.
The paper discusses effects of trade policy on economic growth. The results indicate that high tariff rates on manufactured goods reduce economic growth, while there are no such effects from protection of argicultural goods.
>> Summary
A stylised fact from the large and growing literature on relationships between trade and growth is that liberal trade policies may stimulate growth. However, there is no academic consensus that liberal trade policies are either necessary or sufficient ingredients in growth promoting policies. In this paper, the relationships between trade policy and growth are investigated. The paper adds some new findings. My measure of trade policy is not only applied average tariff rates which have been used by others, but such tariff rates for agriculture and manufacturing separately. The results indicate opposite results of the two: Protection of manufacturing correlates negatively with growth, while tariffs on agriculture imports seem to have a weaker though positive correlation. These results are robust in the sense that they remain significant with the same sign independently of different specifications and inclusions of various control variables.
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