DP14775 Deliberate Surrender? The Impact of Interwar Indian Protection

Author(s): Vellore Arthi, Markus Lampe, Ashwin Nair, Kevin Hjortshøj O'Rourke
Publication Date: May 2020
Date Revised: July 2021
Keyword(s): India, interwar period, Trade Elasticities, trade policy
JEL(s): F13, F14, N75
Programme Areas: International Trade and Regional Economics, Economic History
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=14775

What is the impact of trade policy in developing countries? We ad- dress the question in the context of interwar India, whose trade policies have been accused of harming British export interests. We quantify the impact of trade policy on the value and composition of Indian imports, using novel disaggregated data on both trade policies and imports for 114 commodity categories coming from 42 countries. Indian trade elasticities were generally larger than those in the United Kingdom at the same time. We find that even though Indian protection lowered total imports, it sub- stantially boosted imports from the UK. Trade policy had a big impact on trade flows.