Protectionism

Duncan Green is my new favourite blogger.  It was Liam until his blatant right-wing rant about globalisation (see below).  Here Dunc (as I am now going to call him) talks about protectionism and how developing countries should be allowed to protect their own industries and use industrialisation and import-substitution policies when global demand falls.

The Upper Sixth's next big topic is free trade and protectionism, which has overtures for both the unit 5 and unit 6 exam.

It is all here  and an extract below:

Among its findings was that Asian NICs like South Korea and Taiwan were much more astute than the Latin Americans at riding the global economic tides. When the world economy was booming, they went all out for exports; when global markets slowed, they turned inwards in bouts of industrial upgrading that involved state-directed credit and other support, but also involved protecting themselves from imports of the more advanced sectors (iron and steel, chemicals etc) that they were trying to move into. i.e. protectionism.

If you buy that argument, then now is precisely the time when developing countries that were hitherto cashing in on the commodity boom should consider whether they want to diversify and upgrade, and if so, opt for a period of import substitution and hands-on industrial policy.