Alex Singleton asked me if I would like to contribute the occasional piece to the blog of the Globalisation Institute…of course, was the answer, good people fighting a good fight. The first piece is here.
The Writing Empire Marches On.
One response
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From a UK perspective (economics only – let’s leave the EU political question to one side), your piece makes perfect sense, and I find it hard to disagree with a word. Where I have problems is when economists apply the ‘ultra-free-trade’ model to developing countries, who as yet have no significant non-agricultural capacity. I know the protection of infant industries argument makes no theoretical sense, but real-world situations have shown that when done well, alongside building the legitimacy of the state, it has worked (e.g. Korea). When done badly, of course, e.g. Peronist Argentina, it’s a disaster. I don’t, however, know of a single successful case of a completely open-from-day-one economy succeeding (and you can’t have Hong Kong – I mean one with some intl. comparability). Am I missing one?
Tim adds: I don’t know (other than Hong Kong) of a completely open from day one economy at all, so comparing its success or not with other models is difficult.
There are plenty of theories that show that infant industry protection ought to work, but as we have no example of places that never used it, we have no clear cut comparison. We can only look at relative growth rates rather than absolute….I’ve always found it interesting that Sweden grew relatively faster than the rest of the world when it was changing from an agricultural society to an industrial one, with lower tariffs than most other countries, and after raising them (1950’s) grew relatively more slowly than other countries.
But my fundamental objection to managed trade is a practical one. We’re all pretty clear on the idea that those countries currently poor are so because they are appallingly run. And we’re suggesting that the incompetents who do that should decide which industries to protect?
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