Business Intelligence

Trade And Economic Growth: Historical Evidence

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Executive Summary

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 the authors reassess the empirical evidence about the relationship between tariffs and growth in this era. The 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.

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