IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/14775.html
   My bibliography  Save this paper

Deliberate Surrender? The Impact of Interwar Indian Protection

Author

Listed:
  • O'Rourke, Kevin
  • Arthi, Vellore
  • Lampe, Markus
  • Nair, Ashwin

Abstract

What is the role of trade policy in promoting intra-Empire trade? We address the question in the context of interwar India, whose trade policies have been accused of harming British export interests. We quantify 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. We find that even though Indian protection lowered total imports, it substantially boosted imports from the UK. Despite the rising tariff barriers facing British ex- porters, trade diversion from other countries ensured that Indian trade policy benefited them overall.

Suggested Citation

  • O'Rourke, Kevin & Arthi, Vellore & Lampe, Markus & Nair, Ashwin, 2020. "Deliberate Surrender? The Impact of Interwar Indian Protection," CEPR Discussion Papers 14775, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:14775
    as

    Download full text from publisher

    File URL: https://cepr.org/publications/DP14775
    Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. James E. Anderson & J. Peter Neary, 1996. "A New Approach to Evaluating Trade Policy," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 63(1), pages 107-125.
    2. Eichengreen, Barry & Irwin, Douglas A., 1995. "Trade blocs, currency blocs and the reorientation of world trade in the 1930s," Journal of International Economics, Elsevier, vol. 38(1-2), pages 1-24, February.
    3. Anderson, James E. & Yotov, Yoto V., 2016. "Terms of trade and global efficiency effects of free trade agreements, 1990–2002," Journal of International Economics, Elsevier, vol. 99(C), pages 279-298.
    4. Gianmarco I. P. Ottaviano & Giovanni Peri, 2021. "Rethinking The Effect Of Immigration On Wages," World Scientific Book Chapters, in: Firms and Workers in a Globalized World Larger Markets, Tougher Competition, chapter 9, pages 245-290, World Scientific Publishing Co. Pte. Ltd..
    5. Bruce A. Blonigen & Wesley W. Wilson (ed.), 2018. "Handbook of International Trade and Transportation," Books, Edward Elgar Publishing, number 17028.
    6. Gupta, Bishnupriya, 2001. "The International Tea Cartel During The Great Depression, 1929–1933," The Journal of Economic History, Cambridge University Press, vol. 61(1), pages 144-159, March.
    7. Pinelopi K. Goldberg & Nina Pavcnik, 2016. "The Effects of Trade Policy," NBER Working Papers 21957, National Bureau of Economic Research, Inc.
    8. Trefler, Daniel, 1993. "Trade Liberalization and the Theory of Endogenous Protection: An Econometric Study of U.S. Import Policy," Journal of Political Economy, University of Chicago Press, vol. 101(1), pages 138-160, February.
    9. Rutherford, Thomas F, 1999. "Applied General Equilibrium Modeling with MPSGE as a GAMS Subsystem: An Overview of the Modeling Framework and Syntax," Computational Economics, Springer;Society for Computational Economics, vol. 14(1-2), pages 1-46, October.
    10. Antoni Estevadeordal & Brian Frantz & Alan M. Taylor, 2003. "The Rise and Fall of World Trade, 1870–1939," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(2), pages 359-407.
    11. Klasing, Mariko J. & Milionis, Petros, 2014. "Quantifying the evolution of world trade, 1870–1949," Journal of International Economics, Elsevier, vol. 92(1), pages 185-197.
    12. Christoph E. Boehm & Andrei A. Levchenko & Nitya Pandalai-Nayar, 2023. "The Long and Short (Run) of Trade Elasticities," American Economic Review, American Economic Association, vol. 113(4), pages 861-905, April.
    13. Wolcott, Susan, 1991. "British Myopia and the Collapse of Indian Textile Demand," The Journal of Economic History, Cambridge University Press, vol. 51(2), pages 367-384, June.
    14. Sandra Sequeira, 2016. "Corruption, Trade Costs, and Gains from Tariff Liberalization: Evidence from Southern Africa," American Economic Review, American Economic Association, vol. 106(10), pages 3029-3063, October.
    15. Xia Chen & Qiang Cheng & Ting Luo & Heng Yue, 2020. "Short Sellers and Long‐Run Management Forecasts," Contemporary Accounting Research, John Wiley & Sons, vol. 37(2), pages 802-828, June.
    16. Sergio Correia & Paulo Guimarães & Tom Zylkin, 2020. "Fast Poisson estimation with high-dimensional fixed effects," Stata Journal, StataCorp LP, vol. 20(1), pages 95-115, March.
    17. Jakob B. Madsen, 2001. "Trade Barriers and the Collapse of World Trade During the Great Depression," Southern Economic Journal, John Wiley & Sons, vol. 67(4), pages 848-868, April.
    18. Dye, Alan & Sicotte, Richard, 2006. "How brinkmanship saved Chadbourne: Credibility and the International Sugar Agreement of 1931," Explorations in Economic History, Elsevier, vol. 43(2), pages 223-256, April.
    19. Kitson,Michael & Solomou,Solomos, 2008. "Protectionism and Economic Revival," Cambridge Books, Cambridge University Press, number 9780521071789, September.
    20. Tirthankar Roy, 2017. "The Origins of Import Substituting Industrialization in India," Economic History of Developing Regions, Taylor & Francis Journals, vol. 32(1), pages 71-95, January.
    21. Thackeray, David, 2017. "Buying for Britain, China, or India? Patriotic trade, ethnicity, and market in the 1930s British empire/Commonwealth," Journal of Global History, Cambridge University Press, vol. 12(3), pages 386-409, November.
    22. Douglas A. Irwin, 1998. "The Smoot-Hawley Tariff: A Quantitative Assessment," The Review of Economics and Statistics, MIT Press, vol. 80(2), pages 326-334, May.
    23. Nikolaus Wolf & Albrecht O. Ritschl, 2011. "Endogeneity of Currency Areas and Trade Blocs: Evidence from a Natural Experiment," Kyklos, Wiley Blackwell, vol. 64(2), pages 291-312, May.
    24. Valerie Y. Suslow, 2005. "Cartel contract duration: empirical evidence from inter-war international cartels," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 14(5), pages 705-744, October.
    25. Hillberry, Russell & Hummels, David, 2013. "Trade Elasticity Parameters for a Computable General Equilibrium Model," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 1213-1269, Elsevier.
    26. Thomas Zylkin, 2019. "Verifying the Existence of Maximum Likelihood Estimates in Generalized Linear Models," 2019 Stata Conference 47, Stata Users Group.
    27. Bureau of Agricultural Economics, 1933. "World Trade Barriers in Relation to American Agriculture," Miscellaneous Publications 319846, United States Department of Agriculture, Economic Research Service.
    28. Sergio Correia & Paulo Guimar~aes & Thomas Zylkin, 2019. "Verifying the existence of maximum likelihood estimates for generalized linear models," Papers 1903.01633, arXiv.org, revised Jun 2021.
    29. Stephen Tokarick, 2014. "A method for calculating export supply and import demand elasticities," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 23(7), pages 1059-1087, October.
    30. Jakob B. Madsen, 2001. "Trade Barriers and the Collapse of World Trade During the Great Depression," Southern Economic Journal, John Wiley & Sons, vol. 67(4), pages 848-868, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Pim de Zwart & Markus Lampe & Kevin Hjortshøj O'Rourke, 2024. "The last free traders? Interwar trade policy in the Netherlands and Netherlands East Indies," Economic History Review, Economic History Society, vol. 77(3), pages 1057-1085, August.
    2. 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.
    3. Kris James Mitchener & Kevin Hjortshøj O'Rourke & Kirsten Wandschneider, 2022. "The Smoot-Hawley Trade War," The Economic Journal, Royal Economic Society, vol. 132(647), pages 2500-2533.
    4. Roberto Bonfatti & Björn Brey, 2024. "Trade Disruption, Industrialisation, and the Setting Sun of British Colonial Rule in India," Journal of the European Economic Association, European Economic Association, vol. 22(3), pages 1407-1451.
    5. Laura Panza, 2024. "From a common empire to colonial rule: Commodity market disintegration in the Near East," Economic History Review, Economic History Society, vol. 77(2), pages 584-611, May.
    6. 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.
    7. Ian Keay & Brian D. Varian, 2024. "The impact of preferential market access: British imports into Canada, 1892–1903," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 57(1), pages 140-164, February.
    8. 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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Vellore Arthi & Markus Lampe & Ashwin Nair & Kevin Hjortshøj O'Rourke, 2020. "The Impact of Interwar Protection: Evidence from India," Oxford Economic and Social History Working Papers _180, University of Oxford, Department of Economics.
    2. Kris James Mitchener & Kevin Hjortshøj O'Rourke & Kirsten Wandschneider, 2022. "The Smoot-Hawley Trade War," The Economic Journal, Royal Economic Society, vol. 132(647), pages 2500-2533.
    3. Adam, Marc Christopher, 2019. "Return of the tariffs: The interwar trade collapse revisited," Discussion Papers 2019/8, Free University Berlin, School of Business & Economics.
    4. 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.
    5. Kevin Hjortshøj O’Rourke, 2018. "Two Great Trade Collapses: The Interwar Period and Great Recession Compared," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 66(3), pages 418-439, September.
    6. David S. Jacks & Dennis Novy, 2020. "Trade Blocs and Trade Wars during the Interwar Period," Asian Economic Policy Review, Japan Center for Economic Research, vol. 15(1), pages 119-136, January.
    7. O'Rourke, Kevin, 2017. "Two Great Trade Collapses: The Interwar Period & Great Recession Compared," CEPR Discussion Papers 12286, C.E.P.R. Discussion Papers.
    8. Swati Dhingra & Rebecca Freeman & Hanwei Huang, 2023. "The Impact of Non‐tariff Barriers on Trade and Welfare," Economica, London School of Economics and Political Science, vol. 90(357), pages 140-177, January.
    9. Fontagné, Lionel & Guimbard, Houssein & Orefice, Gianluca, 2022. "Tariff-based product-level trade elasticities," Journal of International Economics, Elsevier, vol. 137(C).
    10. Jacks, David S., 2014. "Defying gravity: The Imperial Economic Conference and the reorientation of Canadian trade," Explorations in Economic History, Elsevier, vol. 53(C), pages 19-39.
    11. William Hynes & David S. Jacks & Kevin H. O'rourke, 2012. "Commodity market disintegration in the interwar period," European Review of Economic History, European Historical Economics Society, vol. 16(2), pages 119-143, May.
    12. Jiang, Lingduo & Lu, Yi & Song, Hong & Zhang, Guofeng, 2023. "Responses of exporters to trade protectionism: Inferences from the US-China trade war," Journal of International Economics, Elsevier, vol. 140(C).
    13. David S. Jacks, 2011. "Defying Gravity: The 1932 Imperial Economic Conference and the Reorientation of Canadian Trade," NBER Working Papers 17242, National Bureau of Economic Research, Inc.
    14. J. M. C. Santos Silva & Silvana Tenreyro, 2022. "The Log of Gravity at 15," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 21(3), pages 423-437, September.
    15. James E. Anderson & Eric van Wincoop, 2004. "Trade Costs," Journal of Economic Literature, American Economic Association, vol. 42(3), pages 691-751, September.
    16. Luisa Kinzius & Alexander Sandkamp & Erdal Yalcin, 2019. "Trade protection and the role of non-tariff barriers," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 155(4), pages 603-643, November.
    17. Banu Demir Pakel & Beata Smarzynska Javorcik & Beata Smarzynska Javorcik, 2018. "Forensics, Elasticities and Benford's Law," CESifo Working Paper Series 7266, CESifo.
    18. Bailey, Michael & Gupta, Abhinav & Hillenbrand, Sebastian & Kuchler, Theresa & Richmond, Robert & Stroebel, Johannes, 2021. "International trade and social connectedness," Journal of International Economics, Elsevier, vol. 129(C).
    19. De Bromhead, Alan & Fernihough, Alan & Lampe, Markus & O'Rourke, Kevin H., 2017. "When Britain turned inward: Protection and the shift towards Empire in interwar Britain," QUCEH Working Paper Series 2017-02, Queen's University Belfast, Queen's University Centre for Economic History.
    20. Benjamin Bridgman, 2013. "Market entry and trade weighted import costs," Canadian Journal of Economics, Canadian Economics Association, vol. 46(3), pages 982-1013, August.

    More about this item

    Keywords

    Trade policy; Trade elasticities; India; Interwar period;
    All these keywords.

    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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:14775. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://www.cepr.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.