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Did Import Substitution Promote Growth in the Late Nineteenth Century?

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  • Douglas A. Irwin

Abstract

The positive correlation between import tariffs and economic growth across countries in the late nineteenth century suggests that tariffs may have played a causal role in promoting growth. This paper seeks to determine if high tariffs stimulated growth by shifting resources out of agriculture and into manufacturing. The most rapidly growing countries were indeed those that reduced the share of employment in agriculture. Tariffs in agricultural exporting (importing) countries may have promoted (retarded) this shift, although two high tariff, high growth, agricultural-exporting outliers (Argentina and Canada) experienced export-oriented growth and did not pursue import substitution policies. This raises the question of whether economic growth led to changes in the structure of employment rather than changes in employment leading to economic growth.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 8751.

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Date of creation: Jan 2002
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Publication status: published as Irwin, Douglas A. "Interpreting The Tariff-Growth Correlation Of The Late 19th Century," American Economic Review, 2002, v92(2,May), 165-169.
Handle: RePEc:nbr:nberwo:8751

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  1. Alan M. Taylor, 1996. "Sources of Convergence in the Late Nineteenth Century," NBER Working Papers 5806, National Bureau of Economic Research, Inc.
  2. O'Rourke, Kevin H, 2000. "Tariffs and Growth in the Late 19th Century," Economic Journal, Royal Economic Society, vol. 110(463), pages 456-83, April.
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  8. Temin, Peter, 2002. "The Golden Age of European growth reconsidered," European Review of Economic History, Cambridge University Press, vol. 6(01), pages 3-22, April.
  9. Douglas A. Irwin, 2002. "Interpreting the Tariff-Growth Correlation of the Late Nineteenth Century," NBER Working Papers 8739, National Bureau of Economic Research, Inc.
  10. Peter Timmer, C., 1988. "The agricultural transformation," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 1, chapter 8, pages 275-331 Elsevier.
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Cited by:
  1. Yilmaz Akyüz, 2005. "The WTO Negotiations on Industrial Tariffs : What is at Stake for Developing Countries?," Trade Working Papers 22080, East Asian Bureau of Economic Research.
  2. Sibylle H. Lehmann and Kevin H. O'Rourke, 2008. "The structure of protection and growth in the late 19th century," The Institute for International Integration Studies Discussion Paper Series iiisdp269, IIIS.
  3. Polterovich, Victor & Popov, Vladimir, 2005. "Appropriate Economic Policies at Different Stages of Development," MPRA Paper 20066, University Library of Munich, Germany.
  4. Antonio Tena Junguito, 2001. "Measuring Protection Over Time. Revenue And Protective Products In The 19th Century European Tariff Growth Debate," Working Papers in Economic History wh017204, Universidad Carlos III, Departamento de Historia Económica e Instituciones.
  5. Michael A. Clemens & Jeffrey G. Williamson, 2002. "Why Did the Tariff-Growth Correlation Reverse After 1950?," NBER Working Papers 9181, National Bureau of Economic Research, Inc.
  6. Antonio Tena Junguito, 2008. "Bairoch revisited. Tariff structure and growth in the late 19th century," Working Papers in Economic History wp08-04, Universidad Carlos III, Departamento de Historia Económica e Instituciones.
  7. Isabel Sanz Villarroya, 2003. "Derechos de Propiedad y Crecimiento Económico en Argentina 1875-1990," Working Papers in Economic History dh030403, Universidad Carlos III, Departamento de Historia Económica e Instituciones.
  8. Antonio Tena Junguito, 2006. "Tariff History Lessons from the European Periphery. Protection Intensity and the Infant Industry Argument in Spain and Italy 1870-1930," Working Papers in Economic History wp06-08, Universidad Carlos III, Departamento de Historia Económica e Instituciones.
  9. Yilmaz Akyuz, 2005. "The WTO Negotiations on Industrial Tariffs: What is at Stake for Developing Countries?," Working Papers 2005/8, Turkish Economic Association.
  10. Grilli, Enzo, 2005. "Political economy and economic development in Latin America in the second half of the 20th century," Journal of Policy Modeling, Elsevier, vol. 27(1), pages 1-31, February.
  11. Falkinger, Josef & Grossmann, Volker, 2004. "Institutions and Development: The Interaction between Trade Regime and Political System," IZA Discussion Papers 1242, Institute for the Study of Labor (IZA).
  12. Yanikkaya, Halit, 2003. "Trade openness and economic growth: a cross-country empirical investigation," Journal of Development Economics, Elsevier, vol. 72(1), pages 57-89, October.
  13. Robert E. Baldwin, 2003. "Openness and Growth: What's the Empirical Relationship?," NBER Working Papers 9578, National Bureau of Economic Research, Inc.
  14. Mustafa Akal, 2006. "Causalities Among Growth Related Policy Variables In Turkey, 1950-2004," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 6(3).

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