EH.Net Abstracts in Economic History

                ABSTRACTS IN ECONOMIC HISTORY
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Name: Antonio Tena Junguito
Email: cano at clio.uc3m.es
Institution: Universidad Carlos III de Madrid

Co-author: none

Title: Lessons on Tariff History from the European Periphery. 
Measuring Protection and the Infant Industry Argument  in Spain and 
Italy 1870-1930

Internet Address of abstracted work: not available

By mail:
Antonio Tena
Universidad Carlos III de Madrid
Dep. Historia Economica
C/Madrid 126
28903 Getafe. MADRID(SPAIN)

Language: English

Abstract:
The late 19th century is one of the most controversial periods for 
economic historians to evaluate the consequences of economic policy 
over the European economic growth. The English free-trade 
climacteric, along with the protectionist strong growth of Germany 
and USA, has often been considered as evidence in support of 
protectionist arguments. Thw theoretical and empirical literature 
shows that in the initial stages of development, especially in 
economies with a small domestic market, protection determines the 
direction in which resources are allocated much more than in 
developed economies. This is particularly true for manufactures 
(Krueger 1998). Commercial strategies, as one of the main 
institutional interventions in industrial and market structures 
during the late 19th century, should be a major research priority to 
understand the different growth performance of the European periphery 
in those years.

This paper compares the growth of protectionism in Spain and Italy 
during the late nineteenth century. According to the literature, both 
were at similar stages of development and reacted with similar 
protectionist polices. Between 1870 and 1900 Italy relies more 
heavily on protection, whereas between 1897 and 1913 Spain 
dramatically increases its average tariff rate.

This work develops a test on the infant industry argument for Spain 
and Italy which aims at measuring the dynamic effects produced by 
protection on both economies. It explores the relation between 
effective protection and comparative advantage developing a simple 
test based on the correlation ranking of both variables. Changes in 
comparative advantage in Spain during the period seem more closely 
related to the commercial policy, while evidence for Italy is less 
conclusive. This conclusion, along with other evidence, supports the 
hypothesis that the slowness of Spanish industrial growth may have 
resulted from its difficulty with identifying its comparative advantages
in the manufacture sector, rather than a failure of domestic demand. In 
the case of Italy, the test is not conclusive; protectionism has no 
strong effect on industrial competiveness. Finally, we suggest that 
economic historians should take into account the classical index problem 
and the fiscal tariff component bias when making assertions about 
relative levels of protection and its impact on economic growth.

Bibliography: Junguito, Antonio Tena. "Lessons on Tariff History from 
the European Periphery. Measuring Protection and the Infant Industry 
Argument in Spain and Italy 1870-1930." Working paper (September 
2000).

Subject: S
Geographical Area: 4
Country/Region: Spain, Italy
Time Period: 7
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