No Access

Tariffs, Growth and Non-Tariff Transport Costs

Department of Economics, Tokyo Keizai University, 1-7-34, Minami-cho, Kokubunji-shi, Tokyo 185-8502, Japan

https://doi.org/10.1142/S1793993324500236Cited by:0 (Source: Crossref)

Abstract

This paper examines the impact of unilateral tariff increases on the world growth rate using a two-country endogenous growth model when firms are internationally mobile, technical knowledge in research and development is an international public good, and iceberg transport costs are not subject to tariffs. In this paper, we find that a unilateral tariff increase in one country raises or lowers the world growth rate, depending on the degree of elasticity of substitution between any two differentiated goods and the share of firms owned by the country that raised tariffs.

Keywords:

JEL: E2, F1, F2, F43

References

Blackburn, K and VTY Hung (2006). Endogenous growth and trade liberalization. International Economic Journal, 23(2), 33–46. Google Scholar
Clemens, MA and JG Williamson (2001). A tariff-growth paradox? Protection’s impact the world around 1975–1997. NBER Working Papers, 8459. Google Scholar
Coe, D and E Helpman (1995). International RnD spillovers. European Economic Review, 39(5), 859–887. Crossref, Google Scholar
Collie, D (1994). Strategic trade policy and retaliation. Japan and the World Economy, 6(1), 75–88. Crossref, Google Scholar
Dinopoulos, E and P Segerstrom (1999a). A Schumpeterian model of protection and relative wages. American Economic Review, 89(3), 450–472. Crossref, Google Scholar
Dinopoulos, E and P Segerstrom (1999b). The dynamic effects of contingent tariffs. Journal of International Economics, 47(1), 191–222. Crossref, Google Scholar
Dollar, D (1992). Outward-oriented developing economies really do grow more rapidly: Evidence from 95 LDCs, 1976–1985. Economic Development and Cultural Change, 40(3), 523–544. Crossref, Google Scholar
Edwards, S (1998). Openness, productivity and growth: What do we really know? Economic Journal, 108(447), 383–398. Crossref, Google Scholar
Escobari, D and DE Vacaflores (2015). Expectations and the dynamic feedback between foreign direct investment and economic growth. International Economic Journal, 29(1), 121–136. Crossref, Google Scholar
Felbermayr, G, B Jung and M Larch (2013). Optimal tariffs, retaliation, and the welfare loss from tariff wars in the Melitz model. Journal of International Economics, 89(1), 13–25. Crossref, Google Scholar
Frankel, JA and D Romer (1999). Does trade cause growth? American Economic Review, 89(3), 379–399. Crossref, Google Scholar
Gros, D (1987). A note on the optimal tariff, retaliation and the welfare loss from tariff wars in a framework with intra-industry trade. Journal of International Economics, 23(3–4), 357–367. Crossref, Google Scholar
Grossman, G and E Helpman (1991). Innovation and Growth in the Global Economy. Cambridge, Massachusetts: MIT Press. Google Scholar
Harrison, A (1996). Openness and growth: A time-series, cross-country analysis for developing countries. Journal of Development Economics, 48(2), 419–447. Crossref, Google Scholar
Irwin, DA (2002). Interpreting the tariff-growth correlation in the late nineteenth century. American Economic Review (Papers & Proceedings), 92(2), 165–169. Crossref, Google Scholar
Johdo, W (2020). The spillover effects of deregulation in a three-country model. Journal of International Commerce, Economics and Policy, 11(2), 2050008. Link, Google Scholar
Johdo, W (2021). Corporation tax, the exchange rate, and cross-border firm mobility. Journal of International Commerce, Economics and Policy, 12(3), 2150015. Link, Google Scholar
Johdo, W (2023). Tariffs, endogenous growth, and the direction of capital flows. Seoul Journal of Economics, 36(3), 247–266. Google Scholar
Keller, W (1998). Are international R&D spillovers trade-related?: Analyzing spillovers among randomly matched trade partners. European Economic Review, 42(8), 1469–1481. Crossref, Google Scholar
Keller, W (2002). Geographic localization of international technology diffusion. American Economic Review, 92(1), 120–142. Crossref, Google Scholar
Keller, W (2004). International technology diffusion. Journal of Economic Literature, 42(3), 752–782. Crossref, Google Scholar
Klenow, P and A Rodriguez-Clare (2004). Externalities and growth. NBER Working Papers, 11009. Google Scholar
Krugman, P (1980). Scale economies, product differentiation, and the pattern of trade. American Economic Review, 70(5), 950–959. Google Scholar
Krugman, P (1991). Increasing returns and economic geography. Journal of Political Economy, 99(3), 483–499. Crossref, Google Scholar
Le, T (2009). Trade, remittances, institutions, and economic growth. International Economic Journal, 23(3), 391–408. Crossref, Google Scholar
Limão, N and K Saggi (2008). Tariff retaliation versus financial compensation in the enforcement of international trade agreements. Journal of International Economics, 76(1), 48–60. Crossref, Google Scholar
Liu, E (2019). Industrial policies in production networks. The Quarterly Journal of Economics, 134(4), 1883–1948. Crossref, Google Scholar
Madsen, JB (2009). Trade barriers, openness, and economic growth. Southern Economic Journal, 76(2), 397–418. Crossref, Google Scholar
Martin, P and GIP Ottaviano (1999). Growing locations: Industry location in a model of endogenous growth. European Economic Review, 43(2), 281–302. Crossref, Google Scholar
O’Rourke, KH (2000). Tariffs and growth in the late 19th century. Economic Journal, 110(463), 456–483. Crossref, Google Scholar
Osang, T and A Pereira (1996). Import tariffs and growth in a small open economy. Journal of Public Economics, 60(1), 45–71. Crossref, Google Scholar
Osang, T and ST Turnovsky (2000). Differential tariffs, growth, and welfare in a small open economy. Journal of Development Economics, 62(2), 315–342. Crossref, Google Scholar
Park, J (2004). International and intersectoral R&D spillovers in the OECD and East Asian economies. Economic Inquiry, 42(4), 739–757. Crossref, Google Scholar
Peretto, P (2003). Endogenous market structure and the growth and welfare effects of economic integration. Journal of International Economics, 60(1), 177–201. Crossref, Google Scholar
Pomfret, R and P Sourdin (2010). Trade facilitation and the measurement of trade costs. Journal of International Commerce, Economics and Policy, 1(1), 145–163. Link, Google Scholar
Rivera-Batiz, LA and PM Romer (1991a). Economic integration and endogenous growth. Quarterly Journal of Economics, 106(2), 531–555. Crossref, Google Scholar
Rivera-Batiz, LA and PM Romer (1991b). International trade with endogenous technological change. European Economic Review, 35(4), 971–1001. Crossref, Google Scholar
Rodríguez, F and D Rodrik (2001). Trade policy and economic growth: A skeptic’s guide to the cross-national evidence. NBER Macroeconomics Annual, 15, 261–325. Crossref, Google Scholar
Romalis, J (2007). Market access, openness and growth. NBER Working Papers, 13048. Google Scholar
Sachs, JD and A Warner (1995). Economic reform and the process of global integration. Brookings Papers on Economic Activity, 26(1), 1–118. Crossref, Google Scholar
Schularick, M and S Solomou (2011). Tariffs and economic growth in the first era of globalization. Journal of Economic Growth, 16, 33–70. Crossref, Google Scholar
Vamvakidis, A (2002). How robust is the growth-openness connection? Historical evidence. Journal of Economic Growth, 7(1), 57–80. Crossref, Google Scholar
Yanikkaya, H (2003). Trade openness and economic growth: A cross-country empirical investigation. Journal of Development Economics, 72(1), 57–89. Crossref, Google Scholar
Zhu, L and BN Jeon (2007). International R&D spillovers: Trade, FDI, and information technology as spillover channels. Review of International Economics, 15(5), 955–976. Crossref, Google Scholar
Zissimos, B (2009). Optimum tariffs and retaliation: How country numbers matter. Journal of International Economics, 78(2), 276–286. Crossref, Google Scholar