- April 2010
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This article revisits Bairoch's hypothesis that in the late nineteenth century tariffs were positively associated with growth, as recently confirmed by a new generation of quantitative studies (see O'Rourke
2000; Jacks 2006; Clemens and Williamson 2002, 2004). This article
highlights the importance of the structure of protection in the relation
between trade policy and its potential growth-promoting impact.
Evidence is based on a new database on industrial tariffs for the 1870s.
The results show that income, factor endowment and policy independence
are important for explaining regional asymmetries between tariffs and
growth. At a global level, increased protection, measured by total and
average tariffs on manufactures, implied more unskilled inefficient
protection and less growth, and this is especially true for the poor
countries in the late nineteenth century. Protection was only positive
for a 'rich club' if we include in this group new settler countries,
which grew rapidly in the late nineteenth century and imposed high
tariffs mainly for fiscal reasons.