Growth,the external terms of trade and endogenous trade liberalization

We study the effects of growth and changes in the external terms of trade on protection. There are two sectors, an urban sector and a rural sector, and trade policy is used to redistribute income between them. We show that growth precedes trade liberalization. In addition, we find that trade reform is triggered by falls in the world prices of primary exports or intermediate imports. These results are shown to hold for tariffs and quotas.