Kicking away the ladder

… rich countries did not develop on the basis of the policies and institutions they now recommend to developing countries. Virtually all of them used tariff protection and subsidies to develop their industries. In the earlier stages of their development, they did not even have basic institutions such as democracy, a central bank and a professional civil service.

There were exceptions, such as Switzerland and the Netherlands, which always maintained free trade. But even these do not conform to today’s development orthodoxy. Above all, they did not protect patents and so freely took technologies from abroad.

Once they became rich, these countries started demanding that the poorer countries practise free trade and introduce “advanced” institutions – if necessary through colonialism and unequal treaties. Friedrich List, the leading German economist of the mid-19th century, argued that in this way the more developed countries wanted to “kick away the ladder” with which they climbed to the top and so deny poorer countries the chance to develop.

.. in the last two decades, when developed countries have exerted enormous pressures on developing countries to adopt free trade, deregulate their economies, open their capital markets, and adopt “best-practice” institutions such as strong patent laws.

During this period, a marked slowdown has occurred in the growth of the developing countries. The average annual per capita income growth rate in the developing countries has basically been halved, from 3% to 1.5% …

– From History debunks the free trade myth by Ha-Joon Chang, 24 Jun 2002.

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