The Case for Export Subsidies

Abstract

In the code of international economic morality which has evolved since the end of the war and is embodied in our international economic institutions, export subsidies are regarded as especially naughty. Import restrictions are explicitly permitted for balance of payments and other reasons. Increases in tariffs are permitted in certain circumstances, such as when low-tariff countries join a customs union, as a defence against dumping and in some cases to protect infant industries. Devaluation is an entirely proper mode of behaviour if there is a fundamental disequilibrium. Only export subsidies are beyond the pale.

I am indebted to Michael Lipton for helpful comments.