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Trade and Economic Growth: Historical Evidence

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  • Schularick, M.
  • Solomou, S.

Abstract

Is free trade good for growth? Some of the most disturbing evidence to the contrary comes from a period that is often described as the first era of globalization. Studies of the period 1870-1914 have emphasised that protectionist tariff policy was associated with higher rates of economic growth. In this paper we reassess the empirical evidence about the relationship between tariffs and growth in this era. Our key findings challenge the idea of the 19th century tariff-growth paradox. High tariffs did not stimulate economic growth. But there is equally little evidence that trade and other external factors were key determinants of economic growth. The paradox of this era of globalization is not that free trade was bad for growth; it is that the international environment seems to have mattered little to countries' growth trajectories.

Suggested Citation

  • Schularick, M. & Solomou, S., 2009. "Trade and Economic Growth: Historical Evidence," Cambridge Working Papers in Economics 0936, Faculty of Economics, University of Cambridge.
  • Handle: RePEc:cam:camdae:0936
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    File URL: http://www.econ.cam.ac.uk/research-files/repec/cam/pdf/cwpe0936.pdf
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    Cited by:

    1. Broadberry, Stephen; Crafts, Nicholas., 2010. "Openness, Protectionism And Britain’S Productivity Performance Over The Long-Run," CAGE Online Working Paper Series 36, Competitive Advantage in the Global Economy (CAGE).
    2. Dan Liu & Christopher M. Meissner, 2013. "Market Potential and the Rise of US Productivity Leadership," NBER Working Papers 18819, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    economic growth; international trade; economic history; growth econometrics; globalization;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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