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The Structure of Tariffs and Long-Term Growth

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  • Nathan Nunn
  • Daniel Trefler

Abstract

We show that the "skill bias" of a country's tariff structure is positively correlated with long-term per capita GDP growth. Testing for causal mechanisms, we find evidence consistent with the existence of real benefits from tariffs focused in skill-intensive industries. However, this only accounts for a quarter of the total correlation between skill-biased tariffs and growth. Turning to alternative explanations, we extend the standard Grossman-Helpman "protection-for- sale" model and show how the skill bias of tariffs can reflect the extent of domestic rent-seeking activities in the economy. We provide evidence that the remaining variation is explained by this endogeneity. (JEL D72, F13, F43, O17, O19, O24, O47)

Suggested Citation

  • Nathan Nunn & Daniel Trefler, 2010. "The Structure of Tariffs and Long-Term Growth," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(4), pages 158-194, October.
  • Handle: RePEc:aea:aejmac:v:2:y:2010:i:4:p:158-94
    Note: DOI: 10.1257/mac.2.4.158
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    References listed on IDEAS

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    Cited by:

    1. Hallegatte, Stephane & Fay, Marianne & Vogt-Schilb, Adrien, 2013. "Green industrial policies : when and how," Policy Research Working Paper Series 6677, The World Bank.
    2. Jeffrey G. Williamson, 2010. "When, Where, and Why? Early Industrialization in the Poor Periphery 1870-1940," NBER Working Papers 16344, National Bureau of Economic Research, Inc.
    3. Yoto V. Yotov, 2013. "Trade Adjustment, Political Pressure, And Trade Protection Patterns," Economic Inquiry, Western Economic Association International, vol. 51(3), pages 1867-1885, July.
    4. Tena-Junguito, Antonio & Lampe, Markus & Fernandes, Felipe Tâmega, 2012. "How Much Trade Liberalization Was There in the World Before and After Cobden-Chevalier?," The Journal of Economic History, Cambridge University Press, vol. 72(03), pages 708-740, September.
    5. Nunn, Nathan & Trefler, Daniel, 2014. "Domestic Institutions as a Source of Comparative Advantage," Handbook of International Economics, Elsevier.
    6. Copeland, Brian R., 2012. "International trade and green growth," Policy Research Working Paper Series 6235, The World Bank.
    7. Alfaro, Laura & Cunat, Alejandro & Fadinger, Harald & Yanping, Liu, 2017. "The real exchange rate, innovation and productivity," Working Papers 17-04, University of Mannheim, Department of Economics.
    8. Johannes Schwarzer, 2016. "Trade and Employment. An Overview," Discussion Notes 1601, Council on Economic Policies.
    9. repec:aea:aecrev:v:107:y:2017:i:9:p:2784-2820 is not listed on IDEAS
    10. Reinhilde Veugelers & Helena Schweiger, 2016. "Innovation policies in transition countries: one size fits all?," Economic Change and Restructuring, Springer, vol. 49(2), pages 241-267, August.
    11. Yuri Simachev & Mikhail Kuzyk & Boris Kuznetsov & Evgeniy Pogrebnyak, 2014. "Russia on the Path Towards a New Technology-Industrial Policy: Exciting Prospects and Fatal Traps," Foresight and STI Governance (Foresight-Russia till No. 3/2015), National Research University Higher School of Economics, vol. 8(4), pages 6-23.
    12. Loren Brandt & Johannes Van Biesebroeck & Luhang Wang & Yifan Zhang, 2017. "WTO Accession and Performance of Chinese Manufacturing Firms," American Economic Review, American Economic Association, vol. 107(9), pages 2784-2820, September.
    13. Jeffrey G. Williamson, 2011. "Industrial Catching Up in the Poor Periphery 1870-1975," NBER Working Papers 16809, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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