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Richmans' Trade and Taxes Blog
Protectionism During Recessions?
The political science blog The Monkey Cage recently reprinted a selection from Political Economist. The selection examines the question of whether and to what degree the typical pattern of protectionism during recessions emerged during the first few years of The Great Recession.
The conclusions end up depending in part on two things: whether one focusses on developed economies or extends the analysis to emerging economies, and whether one focusses on a narrow definition of protectionism or a broader one.
The developed countries were unusually resistant to increasing protectionism, a phenomenon explained in part by the political power of export and import dependent firms in such countries.
"A distinguished body of research exists in this area that is due for a revisit in the age of extensive international supply chains, from Schattschneider’s classic examination of the domestic pressures that led to the Smoot-Hawley Act to Helen Milner’s study of export-dependent firms that resisted protectionism during the crisis of the 1920s and the 1970s. Milner rightly pointed out that “firms are central,” and over the years the export-dependent, multinational firm has evolved in tandem with the increasing complexity of the international supply chain. Today’s firm is not only heavily export-dependent but equally import-dependent in its reliance on intermediate inputs, whether through intra-firm trade or from foreign firms. The extensive international supply chain thus often puts exporting and importing firms on the same side of the political debate, especially when they are members of large multinational firms."
By contrast developing countries engaged in much more extensive protectionism measures:
"In the World Bank’s Temporary Trade Barriers (TTB) project, an important and unique data collection that includes information on pre-crisis and crisis trade policy behavior, Bown finds that temporary trade barriers such as safeguards, countervailing and antidumping duties saw only a slight increase of usage by developed countries, in the neighborhood of 4%. In contrast, emerging market economies were the heavy users of TTBs, whose usage rose by almost 40% between 2008 and 2009."
Comment by Jacob, 9/12/2013:
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