杏吧原创

THE founding myth of the dominant nations is that they achieved their industrial and technological superiority through free trade. Nations that are poor today are told that if they want to follow our path to riches they must open their economies to foreign competition. They are being conned.

Almost every rich nation has industrialised with the help of one of two mechanisms now prohibited by the rules of global trade. The first is 鈥渋nfant industry protection鈥�: defending new industries from foreign competition until they are big enough to compete on equal terms. The second is the theft of intellectual property. History suggests that technological development may be impossible without one or both.

Britain鈥檚 industrial revolution was founded on the textile industry. This was nurtured and promoted by means of ruthless government intervention. As the development economist Ha-Joon Chang at the University of Cambridge has documented, from the 14th century onwards, the state systematically cut out competitors by taxing or banning the import of foreign manufactured products and banning the export of the raw materials to countries with competing industries.

Only when Britain had established technological superiority in almost every aspect of manufacturing did it suddenly discover the virtues of free trade. It was not until the 1850s and 1860s that it opened up most markets.

The US, which now insists that no nation can develop without free trade, defended its markets just as aggressively during its key development phase. In 1816 the tax on almost all imported manufactured products was 35 per cent, rising to 40 per cent in 1820 and, for some goods, 50 per cent in 1832. This gave domestic manufacturers a formidable advantage in their home market. The US remained the most heavily protected nation on earth until 1913. Throughout this period, it was also the fastest-growing.

The three nations that have developed most spectacularly over the past 60 years 鈥� Japan, Taiwan and South Korea 鈥� all did so not through free trade but through land reform, the protection and funding of key industries, and the active promotion of exports by the state.

In South Korea and Taiwan, the state owned all the major commercial banks, and this allowed it to make major decisions about investment. In Japan, the Ministry of International Trade and Industry exercised the same control using legislation. All three used tariffs and a number of clever legal ruses to shut out foreign products that threatened the development of their new industries. They granted major subsidies for exports. They did, in other words, everything that the World Trade Organization, the World Bank and the International Monetary Fund forbid or discourage today.

There are two striking exceptions to this route to development. Neither Switzerland nor the Netherlands used infant industry protection. Instead, as the economic historian Eric Schiff showed in Industrialisation Without National Patents, published in 1971, they simply stole the technologies of other nations. During their key development phases (1850 to 1907 in Switzerland, 1869 to 1912 in the Netherlands), neither country recognised the validity of patents in most economic sectors.

Switzerland鈥檚 industrialisation took off in 1859, when a small company based in Basle pilfered the aniline dying process that had been developed and patented in Britain two years before. The company was later named Ciba; more recently, after a series of mergers and splits, it became Novartis and Syngenta. In the Netherlands, in the early 1870s, two enterprising firms called Jurgens and Van den Bergh 鈥渂orrowed鈥� a patented French recipe and started producing something called margarine. They later merged, and went on to form part of the company named Unilever.

Those nations that are poor today are forbidden by trade rules from following either of these routes to development. Their new industries are immediately exposed to full competition with established companies overseas that have capital, experience, intellectual property rights, established marketing networks and economies of scale on their side. 鈥淭echnology transfer鈥� is encouraged in theory, but forbidden in practice by an ever fiercer patents regime. Unable to develop competitive enterprises of their own, the poor nations are locked into their position as the suppliers of cheap labour and raw materials to the rich world鈥檚 companies. They are, as a result, barred from advancing beyond a certain level of development.

There is no sound argument for permitting rich nations to protect their economies. But there is a powerful case for permitting the poor ones to follow the only routes to development that appear to work.