Trade policy and long-term economic development: Historical evidence from Australia’s colonies in 19th century

Abstract

In our studies, historical data on neighboring colonies of New South Wales and Victoria in 19th century are used to shed new light on an issue which has intrigued economic historians and economists: How is trade policy linked to long-term economic growth?

It is found that Victoria’s higher protection restricted productivity growth directly, but stimulated it indirectly through the revenue effects of promoting greater infrastructure and a consequentially-larger population base.