One of the methods for studying the relation between economic
growth and international trade is considering the effects of tariff on
economic growth. The neo-classic economists believe that free trade
not only has wonderful benefits for every country but for all in the
world, therefore, they are seeking for laterally and multi-conceptual
removal of trade restrictions and advise on the contrary the countries
with taking into consideration of specialization to do their best in
production and international division of labor with little interference
of government in international trade. They confirm that all trade
distortions out of governmental economic policies may deviate the
economic growth rate and per capita income in a long-term process of
transitional period from its main path.
In this paper and in order to show the effects of tariffs on economic
growth, at first we maximize the household utility function in a neoclassic
model. The period of our study is from 1961 up to 1998 lunar.
The effects of tariff on economic growth have been considered in two
different scenarios. In the first scenario, we assume that exogenous
technological progress rate is equal to 2% and depreciation rate is
equal to 10%. In the second scenario, the exogenous technological
progress rate is 2% and depreciation rate is 5%. Both The results of
both confirm that any trade restrictions may results in a reduction in
economic growth rate. In this manner, the effect of tariff rate on
economic growth in post- revolution period in comparison with prerevolution
one has decreased due to the result of reduction in degree
of openness and reduction of population growth rate. On the other
hand, any lower depreciation rate may have a negative effect on
economic growth. Therefore, we conclude that trade, free from any
limitations, may pave the way for economic growth and reveal its
positive effect on it.