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Faculty Sponsor

Zafar Nazarov; Heather Tierney

Department/Program

Economics

Abstract

Over the last few decades global trade has been increasing. As global trade has increased, the effort to lower trade barriers around the world has continued. TheWorld Trade Organization, and those countries that hold to free trade policies, continues to encourage all countries to utilize low trade barriers to increase trade. Tariffs are one trade barrier that is commonly scrutinized and sought out to be lowered or removed to generate increased trade. However, the benefits of free trade policies are starting to be questioned and protectionist policies are being put forward. Those countries putting forward protectionist policies believe that free trade policies will decrease their economic growth. Tariffs are used to protect domestic businesses from foreign trade and are a popular policy to use since they tend to be easy to enact and easy to measure the effect on economic growth. A great deal of economic research demonstrates that tariffs have negative effects on GDP growth, but other research argues that tariffs can have a positive effect on GDP growth, specifically for less developed countries. For this study, data were collected from 89 countries during the period of 2010-2014. The countries were then classified as rich or poor based on the definition from theWorld Bank. A multiple regression analysis was used to discover the effects that tariffs have on GDP growth. Ultimately, it showed that tariffs have no effect on the GDP growth of rich countries, although tariffs have a positive effect on GDP growth for poor countries.

Disciplines

Economics

The Effects of Tariffs on Economics Growth

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Economics Commons

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