The Effect of Tariff on Economic growth: A Cross Sectional Analysis

Abstract

Trade is an economic perception which allows nations to enlarge markets for goods and services and develop their economic conditions. Though free trade is preferable by most of the economists but there are some trade barriers and one of them is tariff. Tariff could affect trade positively or negatively. If we see the historical analysis, it has been said that, tariff mostly decreases economic growth. Still governments have imposed tariff because they want to help domestic producers. So, it could happen that, the result is different because tariff is also needed in some ways. This paper visits the thought of weather tariff has positive or negative effect on economic growth by using cross sectional regression model. To identify the result, I have taken 30 developed and developing countries and their tariff rates from world bank database. Also, I have taken the year 2016 and run the regression model. From where I came up with the fact that, tariff has a negative effect on economic growth and has a significant relationship with each other. Rest of the research paper will give the clearer picture of the relationship and effect between tariff and economic growth.