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Was It Stolper-Samuelson, Infant Industry or Something Else? World Trade Tariffs 1789-1938

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  • Jeffrey G. Williamson

Abstract

This paper uses history to explore the empirical content of two determinants of tariff policy that have a long pedigree: the Stolper-Samuelson corollary to the Heckscher-Ohlin theorem, and the infant-industry argument for protection. It reports a set of world tariff facts for the 150 years between 1789 and 1938 that have not been well appreciated. First, tariff rates varied enormously around the globe with high tariff regions including the United States, Latin America, and industrially-lagging Europe, and the low tariff regions including Asia and the European industrial leaders. Second, while tariff rates rose on the European continent after the 1870s, they rose far more steeply and earlier in Latin America and industrially-lagging Europe, and more steeply even in Asia. Furthermore, after world tariff rates rose between 1865 and 1900, they then fell by half between 1900 and 1920, before tripling between 1920 and 1934. The most popular explanations for these world tariff facts come from two sources: Stolper-Samuelson -- scarce factors should lobby for protection when exposed to more intense world competition, and scarce factors should win the political battle if their votes carry heavy weight; and national industrial policy -- since late 20th century ISI policies must surely have their roots in the 19th century infant industry arguments. Looking at the same history that Eli Heckscher and Bertil Ohlin did to produce their famous theorem, or that Alexander Hamilton and Frederick List did to produce their equally famous infant industry argument, I find that latter is pretty much irrelevant until the 20th century, while the former starts playing an important role a little earlier when global forces open up in the 19th century. Throughout the 150 years, tariff policy was driven consistently (and often more importantly) by revenue needs and strategic tariff behavior. Geography, home market size, world economic environment, trading partner behavior, gunboats and tariff autonomy all mattered. So did Stolper-Samuelson.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9656.

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Date of creation: Apr 2003
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Handle: RePEc:nbr:nberwo:9656

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  1. Bairoch, Paul, 1972. "Free trade and European economic development in the 19th century," European Economic Review, Elsevier, vol. 3(3), pages 211-245, November.
  2. O'Rourke, Kevin H, 2000. "Tariffs and Growth in the Late 19th Century," Economic Journal, Royal Economic Society, vol. 110(463), pages 456-83, April.
  3. Kevin H. O'Rourke & R. Sinnott, 2003. "Migration Flows: Political Economy of Migration and the Empirical Challenges," Trinity Economics Papers 20036, Trinity College Dublin, Department of Economics.
  4. Bates, Robert H. & Brock, Philip & Tiefenthaler, Jill, 1991. "Risk and trade regimes: another exploration," International Organization, Cambridge University Press, vol. 45(01), pages 1-18, December.
  5. John H. Coatsworth & Jeffrey G. Williamson, 2002. "The Roots of Latin American Protectionism: Looking Before the Great Depression," NBER Working Papers 8999, National Bureau of Economic Research, Inc.
  6. Lindert, Peter H., 1998. "Poor relief before the Welfare State: Britain versus the Continent, 1780 1880," European Review of Economic History, Cambridge University Press, vol. 2(02), pages 101-140, August.
  7. Peter H. Lindert & Jeffrey G. Williamson, 2003. "Does Globalization Make the World More Unequal?," NBER Chapters, in: Globalization in Historical Perspective, pages 227-276 National Bureau of Economic Research, Inc.
  8. Nye, John Vincent, 1991. "The Myth of Free-Trade Britain and Fortress France: Tariffs and Trade in the Nineteenth Century," The Journal of Economic History, Cambridge University Press, vol. 51(01), pages 23-46, March.
  9. Kyle Bagwell & Robert W. Staiger, 2004. "The Economics of the World Trading System," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262524341, December.
  10. Michael A. Clemens & Jeffrey G. Williamson, 2002. "Closed Jaguar, Open Dragon: Comparing Tariffs in Latin America and Asia before World War II," NBER Working Papers 9401, National Bureau of Economic Research, Inc.
  11. Conybeare, John A. C., 1983. "Tariff protection in developed and developing countries: a cross-sectional and longitudinal analysis," International Organization, Cambridge University Press, vol. 37(03), pages 441-467, June.
  12. Douglas A. Irwin, 1997. "Higher Tariffs, Lower Revenues? Analyzing the Fiscal Aspects of the "Great Tariff Debate of 1888"," NBER Working Papers 6239, National Bureau of Economic Research, Inc.
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Cited by:
  1. Rui Esteves, 2011. "The Political Economy of Global Financial Liberalisation in Historical Perspective," Economics Series Working Papers Number 89, University of Oxford, Department of Economics.
  2. Swati Dhingra, 2014. "Reconciling Observed Tariffs and the Median Voter Model," CEP Discussion Papers dp1285, Centre for Economic Performance, LSE.
  3. Yilmaz Akyüz, 2005. "The WTO Negotiations on Industrial Tariffs : What is at Stake for Developing Countries?," Trade Working Papers 22080, East Asian Bureau of Economic Research.

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