Protectionism Vs Free Trade (Historically)

[VetLegion]

This is currently discussed in the 'Raise tariffs on America' thread, but there are a couple of topics there and since I am not an economist, I would appreciate if someone would clarify this issue for me separately. I am interested how this developed historically.

Spiffor mentioned South Korea. Is it not true that the relative closeness of their market during their biggest growth had a positive effect on wealth of the country?

Also, from everything I ever read, USA were always one of the most protectionist countries in the world, the trend reversing only after WW II.

Is it true that most countries that are nowadays economic (industrial) giants and thus proponents of free trade, built up their power behind strong protectionism?

If so, how can someone argue against protectionism, especially in countries that aspire to industrialize, or those that are expiriencing a crisis?

[VetLegion]

Oh yeah, if anyone knows examples of countries that managed to industrialize under a free trade regime, I would also appreciate that.

And no, tourism is not an industry

[Ecthy]

Too bad a 5% change does a stab hit and is only possible every 10 years...

[VetLegion]

I am guessing this is a reference to Europa Universalis II or Victoria, none of which I have played.

How about real world?

[DanS]

Bump. This is a good question. A side question is why some countries with the highest per capita GDPs (US, Japan) have only a small part of their economy that is traded.

[monkspider]

I recemend high tariffs, lots of loans to build railroads and industries, and converting all of your POPs in recently madagascar into soldiers.

Sorry, couldn't resist.

[Imran Siddiqui]

Oh yeah, if anyone knows examples of countries that managed to industrialize under a free trade regime, I would also appreciate that.

Well England for one. Though there is some debate whether it was truely free trade... it was more free trade than anywhere else at the least .

[chequita guevara]

Free trade benefits the world leader. Before England was the industrial powerhouse of the 18th and 19th centuries, it was quite protectionist.

[Japher]

Is it true that most countries that are nowadays economic (industrial) giants and thus proponents of free trade, built up their power behind strong protectionism?

I think so, but then I am no historian/economist either.

Would this be a reason to increase Tariffs to encourage industrial development?

You say tourism is not an industry, but what about a country that uses capital from tourism to build other industries under free trade?

[Bereta_Eder]

I think a sound approach, after the creation of modern nationalism, is to consider each economy as "national" meaning looking out for its own benefit. That way concepts such as free trade or protectionism are easily interchanged according to each particular situation to ensure the benefit of the "national economy". So a nation can have free trade where it knows it suits it (it can overtake the competition or at least have a shot) or protectionist at other times when it knows it cannot compete (the recent steel tarrifs are a good example).

[Imran Siddiqui]

I think a sound approach, after the creation of modern nationalism, is to consider each economy as "national" meaning looking out for its own benefit.

Problem being that this economic 'nationalism' may lead to other nationalism which just isn't good. It generally starts to lead to autarky (we can make everything for ourselves) which has a bad effect.

[Bereta_Eder]

Never said anything different
Thanks for explaining to me what autarky means BTW

[Japher]

Problem being that this economic 'nationalism' may lead to other nationalism which just isn't good.

The lack of it could be bad however; like what we're seeing in the EU, with the beitching and moaning over foreign politics and two ruling countries reaping all the benefit for allowing their economies to sag because of it.

[Bereta_Eder]

Actually in economic terms the EU is a "national economy".

Also to dispell any potential confusion in regard to Imran's post: I said how things are best perceived as, not how "they should be or should not be".

[Kidlicious]

Originally posted by DanS
Bump. This is a good question. A side question is why some countries with the highest per capita GDPs (US, Japan) have only a small part of their economy that is traded.

Nations with small economies have to export in large quantities to get the lower average cost with larger quanities. They also need to earn foreign exchange more than the larger nations.