Abstract
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.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Bibliography
Fukushima, T. 1979. Tariff structure, nontraded goods and the theory of piecemeal policy recommendations. International Economic Review 20(2): 427–435.
Fukushima, T. 1981. A dynamic quantity adjustment process in a small open economy, and welfare effects of tariff changes. Journal of International Economics 11(4): 513–529.
Hatta, T. 1977. A recommendation for a better tariff structure. Econometrica 45(8): 1859–1869.
Kemp, M.C. 1966. Note on a Marshallian conjecture. Quarterly Journal of Economics 80: 481–484.
Kemp, M.C. 1974. Learning by doing: formal tests for intervention in an open economy. Keio Economic Studies 11(1): 1–7.
Lerner, A.P. 1936. The symmetry between import and export taxes. Economica 3: 306–313.
Lloyd, P.J. 1974. A more general theory of price distortions in open economies. Journal of International Economics 4(4): 365–386.
Marshall, A. 1926. Memorandum on fiscal policy. In Official papers by Alfred Marshall, ed. J.M. Keynes. London: Macmillan.
Smith, A. 1776. An inquiry into the nature and causes of the wealth of nations, ed. E. Cannan. New York: Modern Library. Reprinted, 1937.
Viner, J. 1937. Studies in the theory of international trade. London: George Allen & Unwin.
Young, L., and M.C. Kemp. 1982. On the optimal stabilization of internal producers’ prices in international trade. International Economic Review 23(1): 123–141.
Author information
Authors and Affiliations
Editor information
Copyright information
© 2018 Macmillan Publishers Ltd.
About this entry
Cite this entry
Kemp, M.C. (2018). Trade Subsidies. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_1653
Download citation
DOI: https://doi.org/10.1057/978-1-349-95189-5_1653
Published:
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-95188-8
Online ISBN: 978-1-349-95189-5
eBook Packages: Economics and FinanceReference Module Humanities and Social SciencesReference Module Business, Economics and Social Sciences