In the global economy Latin American countries have historically been net exporters of agricultural products. This role has limited the region’s possibilities to catch up with developed countries, leaving them subject to fluctuations in commodity prices. The development of Japan, the East Asian Tigers, and China during the second half ... (Show more)
In the global economy Latin American countries have historically been net exporters of agricultural products. This role has limited the region’s possibilities to catch up with developed countries, leaving them subject to fluctuations in commodity prices. The development of Japan, the East Asian Tigers, and China during the second half of the 20th Century, has reinforced the importance of creating a vigorous industrial base for convergence (Naudé and Szirmai, 2012). It is in this context that the role of industrial policies has become more important despite their bad reputation during the Washington Consensus era during the 1980s and 1990s.
Industrial policies in Latin American countries have changed during the 20th Century as different development strategies have dominated the region. While industrial policies started to be explicitly applied after the Second World War, some of them were applied also in the 19th Century. Tariff protection is an example of this early application of industrial policy. Tariffs were introduced in the region to yield fiscal revenues. Contrary to the vision that the Great Depression was the turning point towards high import tariffs, Coatsworth and Williamson (2004) argued that protectionism was already settled before the belle époque (1875 – 1914). Their analysis measured tariffs using custom revenues from imports relative to the total value of imports. However, this measure would not reflect actual tariff protection; instead, it would reflect the level of interaction with the global economy (Rubio, 2006).
In order to establish the actual measure of protection, we will estimate nominal and effective tariff rates of protection of individual goods and combine them into a weighted average. This method has proved better to understand protectionism than measures based on custom duties relative to total value of imports (Bohlin, 2005). We will establish these new measures of protection for a group of Latin American countries (Argentina, Brazil, and Chile) since the beginning of the 20th Century until the 1980s. With this new measure of protection for these countries, we seek to enrich the debate on development strategies, and industrialization in the region.
Bohlin, J. (2005). Tariff protection in Sweden, 1885–1914. Scandinavian Economic History Review, 53(2), 7-29.
Coatsworth, J. H., & Williamson, J. G. (2004). Always protectionist? Latin American tariffs from independence to Great Depression. Journal of latin american studies, 36(2), 205-232.
Naudé, W., & Szirmai, A. (2012). The importance of manufacturing in economic development: Past, present and future perspectives.
Rubio, M. D. M. (2006). Protectionist but globalised. Latin American custom duties and trade during the pre-1914 belle époque. Universidad Pompeu Fabra, Department of Economics and Business. (Show less)