01
Sep
08

Liberalizing tariffs on capital goods accelerates growth

Antoni Estevadeordal and Alan M. Taylor report that liberalizing tariffs on capital and intermediate goods correlates directly to accelerated long-run growth.

Recent trade liberalizations—and their intellectual underpinnings, whether we label them the “Washington Consensus” or not—should take some credit for unwinding many of those inefficiencies from the 1980s to today. Where those barriers have dropped growth accelerations have been significantly higher than where barriers have remained. Some countries have reaped the benefits. More could yet do so and enjoy higher incomes and lower poverty rates—but this is less likely to happen if any new consensus says that trade policy doesn’t matter very much.

Click here for the entire report via The Custom-House.

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