The Macroeconomics of Protectionism: The Case of Britain in the 1930s

Michael Kitson and Solomos Solomou

Cambridge Journal of Economics, 1989, vol. 13, issue 1, 155-69

Abstract: Protection is a controversial policy issue. Examination of the performance of the British economy in the interwar period shows that the introduction of a tariff on manufactures in 1932 had a favorable macroeconomic impact. The resulting improvement in the competitiveness of domestic industry induced a fall in import penetration and generated import substitution. This increased wages and profits in the newly-protected industries, which expanded the level of demand in the economy. While protection cannot account for all the characteristics of economic revival in the 1930s, it was a major source of recovery that has been previously underemphasized. Copyright 1989 by Oxford University Press.

Date: 1989
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