4068 Ann Harrison and Andrés Rodríguez-Clare

and economic growth. These include Chang (2002), Clemens and Williamson (2001),
Irwin (2002), Lehmann and O’Rourke (2008), O’Rourke (2000), Estevadeordal and
Taylor (2008), and Nunn and Trefler (2006).
Clemens and Williamson (2001) and O’Rourke (2000) both find a positive corre-
lation between import tariffs and economic growth across countries during the late
nineteenth century. These two studies hypothesize that protection was associated with
growth because it allowed countries to accelerate the growth of what were then
“emerging” sectors (industry) out of “declining sectors” (agriculture). These emerging
sectors were characterized by learning effects and the kinds of Marshallian externalities
modeled in Section 2. These new explanations for the observed positive relationship
between growth and protection at the turn of the twentieth century could also be used
to explain how first Britain, and then the United States, were able to emerge as eco-
nomic leaders in conjunction with tariffs that were very high in the eighteenth and
nineteenth centuries. Chang (2002) claimed that protection was essential in the trans-
formation of the United States into an industrialized economy in the nineteenth cen-
tury. Others (for one such view, see Sir Arthur Lewis, 1955) have argued that Latin
America’s relatively high growth rates during the 1960s and early 1970s in a time of
high effective rates of protection was also no coincidence.
Irwin (2002) casts doubt on the meaning and robustness of such correlations, argu-
ing that rather than a causal relationship from protection for IP reasons to growth, the
positive correlation comes from the fact that a few fast growing countries (e.g., the
United States, Canada, Argentina) imposed high tariffs as a means of raising fiscal
revenues. Lehmann and O’Rourke (2008) are able to address this criticism by purging
their results of tariffs imposed for revenue purposes. They find no relationship between
tariffs imposed to raise revenue and economic growth.
As pointed out by Lehmann and O’Rourke (2008), what you protect matters. If the
pattern of protection is skewed toward increasing returns sectors where there are important
externalities, then IP would be much more likely to work than if protection is given to
declining sectors or sectors without externalities. In their book analyzing whether openness
to trade is likely to be associated with higher growth, Grossman and Helpman (1991) make
a similar point. Lehmann and O’Rourke examine the pattern of protection and growth for a
sample of developed countries during the period between 1875 and 1913. They find that
while agricultural tariffs were negatively correlated with growth, industrial tariffs were
positively correlated with growth. They do not, however, estimate the impact of protection
on productivity growth, nor do they calculate the net welfare effects of these policies.
Two other recent studies that emphasize that it is the pattern of protection which
matters and not the average level of protection include Estevadeordal and Taylor
(2008) and Nunn and Trefler (2006). Nunn and Trefler find that countries which protect
skill-intensive sectors grow more rapidly than countries which protect unskilled-
labor-intensive industries. Estevadeordal and Taylor disaggregate tariffs into consumption,