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Interpreting the Tariff-Growth Correlation of the Late Nineteenth Century

  • Douglas A. Irwin

Recent research has documented a positive relationship between tariffs and growth in the late nineteenth century. Such a correlation does not establish a causal relationship between tariffs and growth, but it is tempting to view the correlation as constituting evidence that protectionist or inward-oriented trade strategies were successful during this period. This paper argues that such a conclusion is unwarranted and that the tariff-growth correlation should be interpreted with care. First, several individual country experiences in the late nineteenth century are not consistent with the view that import substitution promoted growth. For example, the two most rapidly expanding, high tariff countries of the period Argentina and Canada grew because capital imports helped stimulate export-led growth in agricultural staples products, not because of protectionist trade policies. Second, most land-abundant countries (such as Argentina and Canada) imposed high tariffs to raise government revenue, and revenue tariffs have a different structure than protective tariffs. The fact that labor-scarce, land-abundant countries had a high potential for growth and also tended to impose high revenue-generating tariffs confounds the inference that high tariffs were responsible for their strong economic performance during this period.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 8739.

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Date of creation: Jan 2002
Date of revision:
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:8739
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  1. Morris, Cynthia Taft & Adelman, Irma, 1989. "Nineteenth-century development experience and lessons for today," World Development, Elsevier, vol. 17(9), pages 1417-1432, September.
  2. O'Rourke, K, 1997. "Tariffs and Growth in the Late 19th Century," Papers 97/18, College Dublin, Department of Political Economy-.
  3. Anne O. Krueger, 1997. "Trade Policy and Economic Development: How We Learn," NBER Working Papers 5896, National Bureau of Economic Research, Inc.
  4. Douglas A. Irwin, 2000. "Tariffs and Growth in Late Nineteenth Century America," NBER Working Papers 7639, National Bureau of Economic Research, Inc.
  5. Irwin, Douglas A., 1993. "Free Trade and Protection in Nineteenth-Century Britain and France Revisited: A Comment on Nye," The Journal of Economic History, Cambridge University Press, vol. 53(01), pages 146-152, March.
  6. Estevadeordal, Antoni, 1997. "Measuring protection in the early twentieth century," European Review of Economic History, Cambridge University Press, vol. 1(01), pages 89-125, April.
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