Influence of protectionist customs policy on the concentration and development of heavy industry exemplified by the steelmaking sector in Germany

Abstract

Historically developed countries (USA, France, and UK) have not been
developed on the basis of the principles of free trade, but protectionist policy.
Still today, it is advisable that such a policy is good for developing countries.

The necessity to protect a domestic market has been discussed for hundreds
of years. Beside the main current of classical economics glorifying inter alia
free trade, with the development of capitalism and schools of economic thought,
alternative schools and currents indicating the need of protection came
into being. Protectionist policy may adopt different forms, including tariff
protection discussed in the article, especially the conception of infant industry,
optimal duty as well as subsidies for producers, export promotion etc.
Despite rather common criticism of tariff protection, it should be recognised
that the assumptions described by F. List and A. Hamilton in the 19th century
have solid theoretical foundations and many contemporary economists
(e.g. P. Krugman) demonstrates the advantages of such policy. The author,
with the use of theoretical models, assesses the influence of educational duty
taking into consideration social welfare in a (small and big) country imposing
tariffs as well as global welfare. He also uses statistical data concerning the
United Kingdom, the USA, Japan and Germany in particular. The example of
development, protection and dominance of steelmaking industry in the Nazi
Germany is especially meaningful. The author uses econometric (cliometric)
modeling to demonstrate the relationship between the rapid increase in steel
production and the German government’s protectionist policy. The possibility
of applying tariff protection in the contemporary economy, especially in case
of developing countries, remains an important issue.