Trade Policies and Economic Growth

Abstract

This paper aims to examine the relationship between trade policies and economic growth. In order to test whether restrictive trade policies have a positive impact on economic growth, we investigate America, Australia and China, and, analyse how their economic performance varies between a free trade environment and a relatively protective trade environment. In this paper, we focus on comparative advantage and use various data such as tariff rate, GDP growth rate, unemployment rate, etc. to test the influence of trade policies on economic growth.We find some support that less restrictive trade policy leads to better economic growth; however overall tariff rates do not seem to have a strong effect on economic growth rates