International Trade and Economic Development

Abstract

Protectionist measures—government-imposed restrictions on imports—hurt regional economies in two ways. First, any help they provide to one region of the country is at the expense of several others. For instance, the recent protection of shakes and shingles produced from wood in the Northwest through an increased tariff prompted retaliation from Canada. That nation promptly increased its tariffs on a large number of agricultural and manufactured goods produced in many other regions of the United States. Second, all regions are hurt by U. S. barriers to imports. These barriers hamper the economic development of all regions by acting as a hidden drag on productivity and efficient allocation of resources. Protectionism also serves as a hidden tax on consumers, reducing the amount of income they can spend on other products. Freer trade is no guarantee of prosperity for any given region of the United States. Rather, it reduces the likelihood that any one region will suffer from the unfairness resulting from favoritism to another. For the country as a whole, the elimination of inefficient barriers to commerce makes likely more rapid rates of economic growth and higher living standards.