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Reconciling Trade Protection andExport Promotion in Industrial Policy: A Comparative Study ofDistributional Conflict and Cooperation between Steel and Steel-usingIndustries

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Abstract:

This study will examine one of
the most important and least studied problems of trade and industrial
policy: whether and how governments have been able to prevent policies
designed to help one industry from hurting other industries, especially
exporters. This study focuses on the steel industry and two of its
major customers, automobiles and shipbuilding. Promoting the steel
industry was a central focus of trade and industrial policies in Japan
and many other countries in the postwar period. These countries also
tried to simultaneously promote steel-using industries such as
automobiles and/or shipbuilding, and turn them into successful
exporters. The key problem is that one of the main policies used to
promote steel, trade protection, raises its price, thereby hurting the
competitiveness of industries that use steel. This problem is
especially urgent if governments are trying to turn steel-using
industries into exporters, which cannot pass on the higher costs to
foreign customers. This study will compare the political process by
which this conflict of interest over trade and industrial policy was
dealt with in Japan to what happened in six other countries: South
Korea, Taiwan, Britain, Germany, Brazil, and the US. This diverse set
of countries adopted different sets of industrial and trade policies to
try to reconcile (or ignore) conflicting interests between steel
producers and consumers. Possible explanations for different policies
that this study will evaluate include political and economic
institutions, industrial organization, relative political strength of
the different industries, levels of development, and international
factors. I found that there is a broad pattern of steel-using
industries being compensated for higher steel prices by various means
in a wide range of countries in different stages of development.
Particularly in East Asian countries, great care has been taken to
avoid allowing protection for steel to hurt export industries that use
steel. Moreover, some governments successfully pressured “infant” steel
industries to “grow up” to be competitive in export markets, contrary
to the prediction of neoclassical economics that infant industries grow
politically powerful enough to retain protection indefinitely. It
appears that in major steel producing countries, there is a rough
balance of power between steel producers and steel-using industries,
although the costs of protection for steel are ultimately borne by
domestic household consumers. The approach taken here is very different
from most studies of industrial policy, which typically focus on only
one country and ask whether the policy succeeded in developing a
particular industry or not, without discussing the connections between
related industries.

Most Common Document Word Stems:

steel (255), industri (134), protect (82), auto (75), import (66), price (47), export (46), govern (44), automobil (43), japan (43), japanes (41), polici (41), produc (38), countri (37), us (36), trade (30), product (30), use (28), studi (26), 1988 (25), foreign (24),
Convention
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Association:
Name: The Midwest Political Science Association
URL:
http://www.indiana.edu/~mpsa/


Citation:
URL: http://www.allacademic.com/meta/p84409_index.html
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MLA Citation:

Elder, Mark. "Reconciling Trade Protection andExport Promotion in Industrial Policy: A Comparative Study ofDistributional Conflict and Cooperation between Steel and Steel-usingIndustries" Paper presented at the annual meeting of the The Midwest Political Science Association, Palmer House Hilton, Chicago, Illinois, Apr 15, 2004 <Not Available>. 2009-05-26 <http://www.allacademic.com/meta/p84409_index.html>

APA Citation:

Elder, M. A. , 2004-04-15 "Reconciling Trade Protection andExport Promotion in Industrial Policy: A Comparative Study ofDistributional Conflict and Cooperation between Steel and Steel-usingIndustries" Paper presented at the annual meeting of the The Midwest Political Science Association, Palmer House Hilton, Chicago, Illinois Online <.PDF>. 2009-05-26 from http://www.allacademic.com/meta/p84409_index.html

Publication Type: Conference Paper/Unpublished Manuscript
Review Method: Peer Reviewed
Abstract: This study will examine one of
the most important and least studied problems of trade and industrial
policy: whether and how governments have been able to prevent policies
designed to help one industry from hurting other industries, especially
exporters. This study focuses on the steel industry and two of its
major customers, automobiles and shipbuilding. Promoting the steel
industry was a central focus of trade and industrial policies in Japan
and many other countries in the postwar period. These countries also
tried to simultaneously promote steel-using industries such as
automobiles and/or shipbuilding, and turn them into successful
exporters. The key problem is that one of the main policies used to
promote steel, trade protection, raises its price, thereby hurting the
competitiveness of industries that use steel. This problem is
especially urgent if governments are trying to turn steel-using
industries into exporters, which cannot pass on the higher costs to
foreign customers. This study will compare the political process by
which this conflict of interest over trade and industrial policy was
dealt with in Japan to what happened in six other countries: South
Korea, Taiwan, Britain, Germany, Brazil, and the US. This diverse set
of countries adopted different sets of industrial and trade policies to
try to reconcile (or ignore) conflicting interests between steel
producers and consumers. Possible explanations for different policies
that this study will evaluate include political and economic
institutions, industrial organization, relative political strength of
the different industries, levels of development, and international
factors. I found that there is a broad pattern of steel-using
industries being compensated for higher steel prices by various means
in a wide range of countries in different stages of development.
Particularly in East Asian countries, great care has been taken to
avoid allowing protection for steel to hurt export industries that use
steel. Moreover, some governments successfully pressured “infant” steel
industries to “grow up” to be competitive in export markets, contrary
to the prediction of neoclassical economics that infant industries grow
politically powerful enough to retain protection indefinitely. It
appears that in major steel producing countries, there is a rough
balance of power between steel producers and steel-using industries,
although the costs of protection for steel are ultimately borne by
domestic household consumers. The approach taken here is very different
from most studies of industrial policy, which typically focus on only
one country and ask whether the policy succeeded in developing a
particular industry or not, without discussing the connections between
related industries.

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Abstract Only All Academic Inc.
Associated Document Available The Midwest Political Science Association
Associated Document Available Political Research Online

Document Type: .PDF
Page count: 20
Word count: 7813
Text sample:
RECONCILING TRADE PROTECTION AND EXPORT PROMOTION IN INDUSTRIAL POLICY: A COMPARATIVE STUDY OF DISTRIBUTIONAL CONFLICT AND COOPERATION BETWEEN THE STEEL AND AUTOMOBILE INDUSTRIES BY MARK ELDER Prepared for delivery at the Midwest Political Science Association National Conference Palmer House Hilton Chicago IL April 15-18 2004 Mark Elder Assistant Professor of Political Economy and International Relations James Madison College Michigan State University East Lansing MI 48824 Tel. 517-432-1579 Fax. 517-423-1804 elderm@pilot.msu.edu 1 Introduction This study will examine one of the
"Foreign Policy and the Us Automotive Industry: By Virtue of Necessity." Business and Economic History 28 no. 2 (1999). Stephen Roland Francis. Vehicle of Influence: Building a European Car Market Michigan Studies in International Political Economy. Ann Arbor: The University of Michigan Press 2000. Tate John Jay. Driving Production Home: Guardian State Capitalism and the Competitiveness of the Japanese Automobile Industry. Berkeley: Berkeley Roundtable on the International Economy (BRIE) 1995. Weiss Frank. "Will the Automobile Industry Go the Way


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