Tariffs and Growth: An Empirical Exploration of Contingent Relationships

David N DeJong, Marla Ripoll
2006 Review of Economics and Statistics  
A large body of empirical research indicates that countries with relatively low policy-induced trade barriers tend to enjoy relatively rapid growth, ceteris paribus. In contrast, theoretical models suggest that the relationship between trade barriers and growth may be contingent on the level of income, as well as on the level of tariffs. Employing a single direct trade-barrier measure -ad valorem tariff rates -we find a distinct dichotomy in the relationship between tariffs and growth between
more » ... ch and poor countries. Among the world's relatively rich countries, the relationship is negative; among the poor, it is positive. In addition, we find a U-shaped relationship between the level of ad-valorem tariffs and growth. JEL classification: F14, F43.
doi:10.1162/rest.88.4.625 fatcat:quviciy2avd7thyciblbd5lbpe