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The Impact of Interwar Protection: Evidence from India

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  • Vellore Arthi
  • Markus Lampe
  • Ashwin Nair
  • Kevin Hjortshøj O’Rourke

    (Division of Social Science)

Abstract

Research on the quantitative impact of interwar protection on trade flows remains scarce, and much of it has concluded that the impact was surprisingly small. In this paper we ask: Did Indian interwar protection hurt UK manufacturers, by raising tariffs on manufactured imports? Or did it favour UK interests, by discriminating against “foreign” (i.e. non-British) producers? We answer this question by quantifying the impact of trade policy on the value and composition of Indian imports, using novel disaggregated data on both trade policies and imports for 114 commodity categories coming from 42 countries. Indian trade elasticities were generally larger than those in the United Kingdom at the same time. We find that even though Indian protection lowered total imports, it substantially boosted imports from the UK. Trade policy had a big impact on trade flows.

Suggested Citation

  • Vellore Arthi & Markus Lampe & Ashwin Nair & Kevin Hjortshøj O’Rourke, 2020. "The Impact of Interwar Protection: Evidence from India," Working Papers 20200043, New York University Abu Dhabi, Department of Social Science, revised May 2020.
  • Handle: RePEc:nad:wpaper:20200043
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    Cited by:

    1. Nina Boberg-Fazlic & Markus Lampe & Maja Uhre Pedersen & Paul Sharp, 2021. "Pandemics and protectionism: evidence from the “Spanish” flu," Palgrave Communications, Palgrave Macmillan, vol. 8(1), pages 1-9, December.
    2. Kris James Mitchener & Kirsten Wandschneider & Kevin Hjortshøj O'Rourke, 2021. "The Smoot-Hawley Trade War," CESifo Working Paper Series 8966, CESifo.
    3. Roberto Bonfatti & Björn Brey, 2020. "Trade Disruption, Industrialisation, and the Setting Sun of British Colonial Rule in India," CESifo Working Paper Series 8461, CESifo.
    4. Alan de Bromhead & Alan Fernihough & Markus Lampe & Kevin Hjortshøj O'Rourke, 2021. "Four great Asian trade collapses," Australian Economic History Review, Economic History Society of Australia and New Zealand, vol. 61(2), pages 159-185, July.
    5. Nina Boberg-Fazlic & Markus Lampe & Maja Uhre Pedersen & Paul Sharp, 2021. "Pandemics and protectionism: evidence from the “Spanish” flu," Palgrave Communications, Palgrave Macmillan, vol. 8(1), pages 1-9, December.
    6. Kris James Mitchener & Kirsten Wandschneider & Kevin Hjortshøj O'Rourke, 2021. "The Smoot-Hawley Trade War," CESifo Working Paper Series 8966, CESifo.
    7. Kris James Mitchener Author e-mail: kmitchener@scu.edu & Kirsten Wandschneider Author e-mail: kirsten.wandschneider@univie.ac.at & Kevin Hjortshøj O’Rourke Author e-mail: akevin.orourke@nyu.edu, 2021. "The Smoot-Hawley Trade War," Working Papers 20210061, New York University Abu Dhabi, Department of Social Science, revised Mar 2021.

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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • N75 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - Asia including Middle East

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