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Does tariff liberalization promote trade? Latin America in the long run (1900-2000)

  • Carlo Pietrobelli
  • Silvia Nenci

    ()

    (Department of Law, Università degli Studi Roma Tre)

This paper estimates the effect of trade liberalisation on import performance of selected Latin American countries. The novelty of this study is that it applies a long-term approach covering the whole XX century using times series and panel data analyses. The empirical exercise shows that the relationship between tariffs and import growth in Latin America cannot be taken for granted - as it often happens – and anyway that it is not always quantitatively substantial. In particular, our analysis shows the existence of a long run relationship between tariffs and imports only from the second half of the XX century. It follows that trade liberalisation appears effective in fostering Latin America's trade growth only when integrated within a wider process, implying a multilateral and negotiated approach to trade policy. In this sense, multilateral and regional agreements (e.g. Mercosur) appear to have played a key role not only through tariff reduction but remarkably thanks to the creation of a rule-based system governing global trade relations. This result would confirm the thesis of those who endorse the existence of a formalized trading system to guarantee tariff liberalization and foster trade growth.

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Paper provided by CREI Università degli Studi Roma Tre in its series Working Papers with number 0704.

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Length: 30 pages
Date of creation: 2007
Date of revision: 2007
Handle: RePEc:rcr:wpaper:07_04
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