Publications
Australian federation in 1901 entailed the formation of a customs union among its formerly tariff-autonomous colonies. Although the elimination of tariff barriers to intercolonial/interstate trade would have been welfare-enhancing, Australia’s common external tariff was set considerably higher than the tariffs on external goods imported by the pre-federation colonies, implying a welfare reduction. Using a dataset of 3,584 commodity- and colony-disaggregated imports, this paper estimates trade restrictiveness indices and welfare losses for the Australian colonies and Commonwealth. Despite the high external tariff post federation, the customs union produced a net static welfare gain conservatively estimated to have been 0.17% of GDP.
Canada initiated the formation of the (modern) imperial trade bloc in 1897 when it extended preferential market access to imports from Britain. British goods initially received a preferential reduction of one-eighth of the applicable duty, rising to one-quarter in 1898 and one-third in 1900. Because duties varied across imported commodities, the uniform relative margins of preference resulted in cross-commodity variation in the absolute margins of preference. This cross-commodity variation is exploited in our paper. Relying on a dataset that includes over 32,000 Canadian import products, we find that a 1 percentage-point increase in the absolute margin of preference was associated with a 5.4% increase in the value of imports from Britain. Counterfactually, if Canada had not adopted a preferential trade policy, by 1903 the value of British imports into Canada would have been reduced by approximately one-half.
This research note contributes to the debate over whether British exports were elastic to foreign tariffs before the First World War. In doing so, this study is the first to make econometric use of the commodity- and country-disaggregated foreign tariff data that Britain’s Board of Trade compiled for the year 1902. Contrary to previous literature, British exports were indeed elastic to foreign tariffs across a range of manufactured commodities, with a conservative estimate of the elasticity being 3.1, which is not low by modern standards. Counterfactually, if foreign countries had emulated Britain’s policy of free trade in manufactures in 1902, a partial-equilibrium estimate is that British exports would have been 57 per cent higher. If the trade liberalizing trend of the mid-nineteenth century persisted into the late-nineteenth century, then much of the late-Victorian deceleration of British exports would have been avoided.
In the Edwardian era, the British Dominions adopted policies of imperial preference amid a period of rising imports from the United States and industrial Continental Europe. Hitherto, there has been no econometric assessment of whether these policies diverted the Dominions’ imports toward the Empire, as was intended. This paper focuses on New Zealand’s initial policy of imperial preference, codified in the Preferential and Reciprocal Trade Act of 1903. New Zealand’s policy was unique insofar as it extended preference to only certain commodities and not others. Using propensity-score matching, this paper exploits the cross-commodity variation in the extension of preference and finds that, on the whole, the Preferential and Reciprocal Trade Act did not divert New Zealand’s imports toward the Empire. However, for those few commodities receiving very high absolute margins of preference (20 per cent ad valorem), a statistically significant effect of the preferential policy is found. Altogether, this case study of New Zealand reveals a contrast between the Edwardian system of imperial preference and the trade-diverting system of imperial preference that resulted from the Ottawa Agreements of the interwar era.
Protection and the British rayon industry during the 1920s, Business History, 64 (2022), pp. 1131-48
The Finance Act of 1925 imposed upon rayon yarn an excise duty of 1s. per lb. and an import duty of 2s. per lb. This article argues that the difference between the excise and import duties was not intended as classic protection. Rather, the difference was intended only to indemnify British producers for the excise -wrought decline in domestic consumption by means of an offsetting reduction of imports. This article then estimates that, had the rayon duties been removed in 1926, the share of imports in Britain’s growing consumption of rayon yarn would have increased from one-tenth to at least one-quarter. Trade policy had secured the domestic market for British rayon firms prior to the formation of an international cartel in 1927. More broadly, this article instantiates that trade policy was considerably distorting the British market for manufactured goods well before the landmark Import Duties Act of 1932.
This article tests for the presence of a tariff-growth correlation among the seven tariff-autonomous colonies of late-nineteenth-century Australasia, making use of several colony-specific macroeconomic series that have only recently become available. Introducing tariffs to a convergence model yields no evidence of an association between tariffs and growth among the Australasian colonies. This finding is unaltered when the tariff variable is replaced by a purposefully constructed proxy variable for the tariff on manufactures specifically. Additionally, this article finds little evidence that tariffs induced an intersectoral adjustment into manufacturing.
Before 1932, Britain’s essentially free-trade policy left barely any scope for reciprocating the preferential tariffs that the Dominions applied to Britain’s exports. Thus, Britain attempted to reciprocate by means of a “soft” trade policy aimed at increasing Britain’s imports from the empire through wide-reaching publicity coordinated by the Empire Market Board (EMB). This article, the first econometric assessment of the EMB, argues that there was not a differential increase in the volume of those imports advertised by the EMB. Principal arguments for this failure are that British consumers were frequently unaware of the geographic origin of many commodities and that they tended to identify company brand more than country of origin.
This article constructs indicators of revealed comparative advantage for 18 British manufacturing industries for the years 1880, 1890, and 1900. These indicators constitute the earliest systematic measurements of the relative performance of British industries. The indicators are then employed in a four-factor Heckscher-Ohlin model of trade, with the factors being capital, labour, material inputs, and human capital. Contrary to the previous literature, the manufacturing comparative advantages of late-Victorian Britain were not in the relatively labour-intensive industries. By 1890, there was a distinctly labour-economizing regime within British manufacturing. Contributing to this pattern of within-sector specialization were emigration from Britain and the full absorption of displaced agricultural labour into the manufacturing sector. This article concludes with the suggestion that, in the late-Victorian era, British and American manufacturing were not so dissimilar, at least relative to Continental manufacturing.
Prior to the Import Duties Act of 1932, an assortment of legislation expanded the scope of manufacturing protection in Britain. This article assesses the magnitude of manufacturing protection before the Import Duties Act and finds that, in 1930, 9% of net manufacturing output occurred in a protected industry. In the late 1920s, protected industries exhibited above-average growth in labour productivity. However, protection was disproportionately extended to newer manufacturing industries, which presented greater potential for productivity growth. This article concludes that protection did not enhance productivity growth in Britain's manufacturing industries in the late 1920s.
Previous scholarship has suggested that British trade was generally unaffected by foreign tariffs during the period from 1870-1913. This article focuses specifically on Anglo-American trade, the largest bilateral flow of trade during the first era of globalization, and finds that tariffs were the sole inter-temporal determinant of Anglo-American trade costs. However, the determinacy of tariffs for Anglo-American trade costs only becomes apparent when the tariff variable incorporates a measure of the bilateral American tariff toward Britain, which this article reconstructs. The article concludes by claiming that Anglo-American trade represents a major qualification to any emerging consensus that foreign tariffs were of minor significance to the trade of late nineteenth-century Britain.
The Ford thesis argued that there was a short-term causal relationship between British overseas investment and British merchandise exports in the late nineteenth century. However, economic historians since Ford have found little empirical evidence in support of this argument. Using data on bilateral British lending, this article finds that such a relationship did exist, with British ex ante lending preceding merchandise exports by two years. A case study of New Zealand, which had an extraordinarily high share of Britain in its imports, reveals that the relationship was conditional upon the lending being allocated to social overhead capital.