Trade Freedom and Revenue from Trade Taxes: a Cross-Country Analysis

Abstract

In order to estimate the relationship between trade freedom index and revenue from trade taxes we used the data for 104 countries worldwide for 2012. For further analysis we divide countries into two groups according to their income level as specified in the World Bank classification. We find a significant negative correlation between trade freedom and revenue from international trade taxes in low-income and lower-middle-income economies which allowed us to make conclusions about economic policy of countries at different stages of trade liberalization.