Abstract

According to the Washington Consensus, developing countries' growth would benefit from reductions in barriers to trade. However, the empirical basis for judging trade reforms is weak. Econometrics are mostly ad hoc, results are typically not judged against models, policies are poorly measured, and most studies are based on pre-1990 experience. We address these concerns by employing a model with capital and intermediate goods, compiling new disaggregated tariff measures, and employing treatment and control regression analysis with differences-in-differences. We find that a specific treatment, liberalizing tariffs on imported capital and intermediate goods, led to faster growth, consistent with the model.

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Supplementary data