Skip to main content
×
×
Home

What Do We Really Know about Protection before the Great Depression: Evidence from Italy

  • Giovanni Federico (a1) and Michelangelo Vasta (a2)
Abstract

The impact of protection on economic growth has enjoyed a revival in recent times, with the publication of a number of comparative quantitative papers. They all share a common weakness: they measure protection as the ratio of custom revenues to import value, which biases results if demand for imports is not perfectly inelastic. In this article, we show that the measure of protection matters. We estimate the James Anderson and Peter Neary (2005) Trade Restrictiveness Index for Italy from unification to the Great Depression. We suggest a different interpretation of some key moments of Italian trade policy and we show that the aggregate welfare losses were small in the long run and mostly related to protection on sugar in the 1880s and 1890s. We document that using different measures of protection affects results of the causal relation between trade policy on economic growth in Italy and in the United States. Accordingly, we argue that a systematic re-estimating of protection in the economic history of trade policy is needed.

Copyright
Footnotes
Hide All

A previous version of this article was presented at the Colloque International Les politiques commerciales en Europe 1850–1913, held in Bordeaux (March 2013). The authors thank all participants for comments and criticism. We also thank Paul Sharp and Jeffrey Williamson for having shared their data with us. Precious and valuable research assistance has been provided by Francesco Calvori and Sara Pecchioli, while Paul Sharp and Annetta Maria Binotti helped us with the cointegrated VAR approach. The usual disclaimer applies.

Footnotes
References
Hide All
Allen, Robert C. Global Economic History. A Very Short Introduction. Oxford: Oxford University Press, 2011.
Anderson, James. “Tariff-Index Theory.Review of International Economics 3, no. 2 (1995): 156–73.
Anderson, James, and Neary, Peter. Measuring the Restrictiveness of International Trade Policy. Cambridge, MA: MIT Press, 2005.
Bachi, Riccardo. L'Italia economica nel … Milano-Roma-Napoli: Società Dante Alighieri, 1914–1922.
Baffigi, Alberto, Stephen, Broadberry, Giordano, Claire, et al. . “Data Appendix – Italy's National Accounts (1861–2010).” In The Oxford Handbook of the Italian Economy Since the Unification, edited by Gianni Toniolo, 631–712. Oxford: Oxford University Press, 2013.
Bai, Jushan, and Perron, Pierre. “Computation and Analysis of Multiple Structural Change Models.Journal of Applied Econometrics 18, no. 1 (2003): 122.
Bairoch, Paul. “European Trade Policy 1815–1915.” In The Cambridge Economic History of Europe. Vol. 8. The Industrial Economies: The Development of Economic and Social Policies, edited by Mathias, Peter and Pollard, Sidney, 1160. Cambridge: Cambridge University Press, 1989.
Beaulieu, Eugene, and Cherniwchan, Jevan. “Tariff Structure, Trade Expansion and Canadian Protectionism, 1870–19102.Canadian Journal of Economics/Revue Canadienne d'economique 47, no. 1 (2014): 147–72.
Board of Trade (ad annum). Statistical Abstract for the Several Colonial and Other Possessions…. Later Statistical Abstract for the British Empire. Trade and Commerce Section. London: His Majesty Stationery Office.
Broadberry, Stephen, Giordano, Claire, and Zollino, Francesco. “Productivity.” In The Oxford Handbook of the Italian Economy Since the Unification, edited by Toniolo, Gianni, 187–226. Oxford: Oxford University Press, 2013.
Broda, Christian, and Weinstein, David E.. “Globalization and the Gains from Variety.The Quarterly Journal of Economics 121, no. 2 (2006): 541–85.
Capie, Forrest. “Tariff Protection and Economic Performance in the Nineteenth Century.” In Policy and Performance in International Trade, edited by Black, John and Winters, Alan, 124. Basingstoke: Macmillan, 1983.
Carter, Susan B., Gartner, Scott Sigmund, Haines, Michael R., et al. . Historical Statistics of the United States: Millennial Edition. Cambridge: Cambridge University Press, 2006.
Chalmin, Philippe G.The Important Trends in Sugar Diplomacy before 1914.” In Crisis and Change in the International Sugar Economy 1860–1914, edited by Albert, Bill and Graves, Adrian, 919. Norwich and Edinburg: ISC Press, 1984.
Chen, Bo, and Ma, Hong. “Trade Restrictiveness and Deadweight Loss in China's Imports.Frontiers of Economics in China 7, no. 3 (2012): 478–94.
Chen, Bo, Ma, Hong, and Xu, Yuan. “Measuring China's Trade Liberalization: A Generalized Measure of Trade Restrictiveness Index.Journal of Comparative Economics 42, no. 4 (2014): 9941006.
Clemens, Michael, and Williamson, Jeffrey G.. “Why Did the Tariff-Growth Correlation Change after 1950?Journal of Economic Growth 9, no. 1 (2004): 546.
Cohen, Jon, and Federico, Giovanni. The Economic Development of Italy. Cambridge: Cambridge University Press, 2001.
Coppa, Frank J.The Italian Tariff and the Conflict between Agriculture and Industry: The Commercial Policy of Liberal Italy, 1860–1922.Journal of Economic History 30, no. 4 (1970): 742–69.
Corbino, Epicarmo. Annali dell'economia italiana. 5 vols. Città di Castello, 1931–1938.
De Stefani, Alberto. La legislazione economica della Guerra. Bari: Laterza, 1926.
Del Vecchio, Edoardo. La via italiana al protezionismo. Roma: Camera dei Deputati, 1979.
Federico, Giovanni. “Una stima del valore aggiunto dell'agricoltura italiana.” In I conti economici dell'Italia. 3∗∗ Il valore aggiunto 1891, 1938 e 1951, edited by Rey, Guido M., 4112. Bari: Laterza, 2002.
Federico, Giovanni. “Protection and Italian Economic Development: Much Ado about Nothing?” In Classical Trade Protectionism 1815–1914, edited by Jean-Pierre Dormois and Pedro Lains, 193–218. London and New York: Routledge, 2006.
Federico, Giovanni, Natoli, Sandra, Tattara, Giuseppe, et al. . Il commercio estero italiano 1861–1939. Bari: Laterza, 2012.
Federico, Giovanni, and O'Rourke, Kevin. “Much Ado about Nothing? The Italian Trade Policy in the 19th Century.” In The Mediterranean Response to Globalisation before 1950, edited by Williamson, Jeffrey G. and Pamuk, Sevket, 269–96. London: Routledge, 2000.
Federico, Giovanni, and Antonio Tena-Junguito. “Was Italy a Protectionist Country?European Review of Economic History 2, no. 1 (1998): 7397.
Federico, Giovanni, and Antonio Tena-Junguito. “Did Trade Policy Foster Italian Industrialisation? Evidences from Effective Protection Rates, 1870–1830.Research in Economic History 19 (1999): 111–30.
Federico, Giovanni, and Tena-Junguito, Antonio. “A Tale of Two Globalizations: World Trade and Openness, 1800–2010.Mimeo, 2015a.
Federico, Giovanni, and Tena-Junguito, Antonio. “Lewis Revisited: Tropical Polities Competing on the World Market, 1830–1938.Mimeo, 2015b.
Federico, Giovanni, and Vasta, Michelangelo. “Was Industrialization an Escape for the Commodity Lottery? Evidence from Italy 1861–1939.” Explorations in Economic History 47, no. 2 (2010): 228–43.
Federico, Giovanni, and Vasta, Michelangelo. “What Do We Really Know about Protection before the Great Depression: Evidence from Italy.CEPR Discussion Paper No. 10522, 2015.
Federico, Giovanni, and Wolf, Nicholaus. “Comparative Advantage: A Long-Run Perspective.” In Handbook of Italian Economic History Since the Unification, edited by Gianni Toniolo, 327–50. Oxford: Oxford University Press, 2013.
Feenstra, Robert C.Estimating the Effects of Trade Policy.” In Handbook of International Economics. Vol. 3, edited by Grossman, Gene and Rogoff, Kenneth S., 1553–95. Amsterdam: Elsevier, 1995.
Fenoaltea, Stefano. “Il valore aggiunto dell'industria italiana nel 1911.” In I conti economici dell'Italia. 2 Una stima del valore aggiunto nel 1911, edited by Rey, Guido M., 105–90. Bari: Laterza, 1992.
Fenoaltea, Stefano, and Bardini, Carlo. “Il valore aggiunto dell'industria.” In I conti economici dell'Italia. 3∗∗ Il valore aggiunto 1891, 1938 e 1951, edited by Rey, Guido M., 114228. Bari: Laterza, 2002.
Giretti, Edoardo. I trivellatori della nazione italiana. Roma: Libreria politica moderna, 1903.
Irwin, Douglas. “Trade Restrictiveness and Deadweight Losses from U.S. tariffs.American Economic Journal: Economic Policy 2, no. 3 (2010): 111–33.
Jacks, David. “New Results on the Tariff-Growth Paradox.European Review of Economic History 10, no. 2 (2006): 205–30.
James, Harold, and O'Rourke, Kevin. “Italy and the First Age of Globalization 1861–1940.” In The Oxford Handbook of the Italian Economy Since the Unification, edited by Gianni, Toniolo, 3768. Oxford: Oxford University Press, 2013.
Kee, Hiau Looi, Nicita, Alessandro, and Olarreaga., MarceloImport Demand Elasticities and Trade Distortions.Policy, Research Working Paper WPS No. 3452, Washington, DC: World Bank, 2004.
Kee, Hiau Looi, Nicita, Alessandro, and Olarreaga, Marcelo. “Import Demand Elasticities and Trade Distortions.Review of Economics and Statistics 90, no. 4 (2008): 666–82.
Kee, Hiau Looi, Nicita, Alessandro, and Olarreaga, Marcelo. “Estimating Trade Restrictiveness Indices.Economic Journal 119, no. 534 (2009): 172–99.
Kee, Hiau Looi, Nicita, Alessandro, and Olarreaga, Marcelo. “Is Protectionism on the Rise? Assessing National Trade Policies during the Crisis of 2008.World Bank Policy Research Paper No. 5274, online data-base (2010). http://econ.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTRESEARCH/0,,contentMDK:22574446~pagePK:64214825~piPK:64214943~theSitePK:469382,00.html (accessed 11 November 2011).
Lampe, Markus, and Sharp, Paul. “Tariffs and Income: A Time Series Analysis for 24 Countries.Cliometrica 7, no. 3 (2013): 207–35.
Lehmann, Sybille, and O'Rourke, Kevin. “The Structure of Protection and Growth in the Late 19th Century.Review of Economics and Statistics 93, no. 2 (2011): 606–16.
Lloyd, Peter. “100 Years of Tariff Protection in Australia.Australian Economic History Review 48, no. 2 (2008): 99145.
Lloyd, Peter, and MacLaren, Donald. “Partial and General-Equilibrium Measures of Trade Restrictiveness.Review of International Economics 18, no. 5 (2010): 1044–57.
Mitchell, Brian R. International Historical Statistics: Europe 1750–2005. London: Palgrave, 2007.
Movimento Commerciale del Regno d'Italia. Rome: Ministero delle Finanze, ad annum.
O'Rourke, Kevin. “Tariffs and Growth in the Late 19th Century.Economic Journal 110, no. 463 (2000): 456–83.
Parravicini, Giannino. La politica fiscale e le entrate effettive del Regno d'Italia 1860-1890. Torino: ILTE, 1958.
Pritchett, Lant, and Sethi, Geeta. “Tariff Rates, Tariff Revenue, and Tariff Reform: Some New Facts.World Bank Economic Review 8, no. 1 (1994): 116.
Schularick, Moritz, and Solomou, Solomos. “Tariffs and Economic Growth in the First Era of Globalization.Journal of Economic Growth 16, no. 1 (2011): 33–70.
Stern, Robert, Francis, Jonathan, and Schumacher, Bruce. Price Elasticities in International Trade. London: Macmillan, 1976.
Tattara, Giuseppe. “An Example of Countertrade: The Anglo-Italian Clearing.Rivista di storia economica 2, International issue (1985): 115–54.
Tena-Junguito, Antonio. “Un nuevo perfil del proteccionismo español durante la Restauración 1875–1930.Revista de Historia Económica/Journal of Iberian and Latin American Economic History (Second Series) 17 (1999): 579–620.
Vamvakadis, Athanasios. “How Robust Is the Growth-Openness Connection? Historical Evidence.Journal of Economic Growth 7, no. 1 (2002): 57–80.
Vasta, Michelangelo. “Italian Export Capacity in a Long Run Perspective (1861–2009): A Tortuous Path to Stay in Place.Journal of Modern Italian Studies 15, no. 1 (2010): 133–56.
Williamson, Jeffrey G. Trade and Poverty. When the Third World Fell Behind. Cambridge, MA: MIT Press, 2011.
Yates, Paul L. Forty Years of Foreign Trade. London: George Allen and Unwin, 1959.
Zamagni, Vera. An Economic History of Italy. Oxford: Oxford University Press, 1994.
Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

The Journal of Economic History
  • ISSN: 0022-0507
  • EISSN: 1471-6372
  • URL: /core/journals/journal-of-economic-history
Please enter your name
Please enter a valid email address
Who would you like to send this to? *
×

Metrics

Altmetric attention score

Full text views

Total number of HTML views: 6
Total number of PDF views: 104 *
Loading metrics...

Abstract views

Total abstract views: 421 *
Loading metrics...

* Views captured on Cambridge Core between September 2016 - 19th July 2018. This data will be updated every 24 hours.