Kicking Away the Ladder. Development Strategy in Historical Perspective

Source: Bairoch 1993, p. 40, table 3.3.

Notes:

R = Numerous and important restrictions on manufactured imports existed and therefore average tariff rates are not meaningful.

1. World Bank (1991, p. 97, Box table S.2) provides a similar table, partly drawing on Bairoch's own studies that form the basis of the above table. However, the World Bank figures, although in most cases very similar to Bairoch's figures, are unweighted averages, which are obviously less preferable to the weighted average ,figures that Bairoch provides.

2. These are very approximate rates, and give range of average rates, not extremes.

3. Austria-Hungary before 1925.

4. In 1820, Belgium was united with the Netherlands.

5. The 1820 figure is for Prussia only.

6. Before 1911, Japan was obliged to keep low tariff rates (up to 5%) through a series of 'unequal treaties' with the European countries and the USA. The World Bank table cited in note 1 above gives Japan's unweighted average tariff rate for all goods (not just manufactured goods) for the years 1925, 1930, 1950 as 13%, 19%, 4%.

Despite these limitations, as I have pointed out in Chapter 1 and will show in more detail in the rest of this chapter, virtually all NDCs actively used interventionist industrial, trade and technology (ITT) policies that are aimed at promoting infant industries during their catch-up periods.[10] As we shall see later, there were some apparent exceptions to this, such as Switzerland and the Netherlands, but these were countries that were either at or very near the technological frontier and thus did not, by definition, need much infant industry promotion. Some countries used activist ITT policies even after the catch-up was successfully achieved (Britain in the early nineteenth century, the USA in the early twentieth century). Tariff protection was obviously a very important policy tool in the ITT policy package used by the NDCs, but, as we shall show later, it was by no means the only one used, or even necessarily the most important.

On the trade front, subsidies and duty drawbacks on inputs for exported goods were frequently used to promote exports. Governments both provided industrial subsidies and used various public investment programmes, especially in infrastructure but also in manufacturing. They supported foreign technology acquisition, sometimes by legal means such as financing study tours and apprenticeships, and sometimes through illegal measures, which included support for industrial espionage, smuggling of contraband machinery and refusal to acknowledge foreign patents. Development of domestic technological capabilities was encouraged through financial support for research and development, education and training. Measures were also taken to raise awareness of advanced technologies (for example, the establishment of model factories, organisation of exhibitions, granting of free imported machinery to private sector firms). In addition, some governments created institutional mechanisms that facilitated public-private cooperation (for example, public-private joint ventures and industry associations with close links with the government). It is important to note that many of these policies are greatly frowned upon these days, even when they have not been made explicitly illegal through bilateral and multilateral agreements.