That it may be in the interest of a prince or nation to subsidize foreign trade is an ancient doctrine. However, the manner in which subsidization has been justified and the means by which it has been effected have changed radically over the years. In the 17th and 18th centuries, the subsidization of exports was a corollary of the general Mercantilist doctrines of the time (Viner 1937); and the British Navigation Acts were defended, even by Adam Smith (1776), as ensuring that England would be adequately provided with ships and sailors in time of war. In the 19th century, Alexander Hamilton and the economists List, J.S. Mill and Bastable argued that industries which in the face of foreign competition are unprofitable but which are capable of learning might qualify for temporary support (see Kemp 1974, for a modern statement of this ‘infant industry’ doctrine). And some 20th-century economists have advocated export subsidies as a means of alleviating unemployment.
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