A reversal in the historical role of tariffs in economic growth? The cases of Brazil and Portugal

Abstract

This paper discusses the comparative role of protectionism on Brazilian and Portuguese economic growth for the period 1860-1950 in the context of the available theoretical approaches from international economics. Although the role of tariffs has long been debated in the historiography of both countries, this paper provides the first exercise that uses a methodology based on a macro-econometric approach for long-run time-series. Given Clemens' and Williamson's conclusion that the world environment matters, we test their claim for two countries on the tariff reversal paradox. The Brazilian and the Portuguese experiences confirm that protection was correlated with growth in the period before World War I, and it is unlikely that freer trade would have increased Portuguese growth, contrary to the established thesis. The First World War, however, was a turning point for Brazil. In carrying out this study, we have used the best data available to us, occasionally departing from those used by Clemens and Williamson. Our conclusions hold for alternative data sets.