The Department of Economics invites you to a Faculty seminar with Kevin O'Rourke, Director of Research at the CNRS and Professor of Economics at Sciences Po Paris.
While there has been a lot written on interwar trade policy in the British Empire, interwar protectionism in the Dutch Empire remains understudied. The English-language literature only mentions the Netherlands and Dutch East Indies in passing, typically as examples of more general phenomena: strongholds of liberal sentiment reluctantly going with the protectionist flow of the times (Kindleberger, 1989), or gold standard stalwarts forced to impose tariffs and quotas to protect the balance of payments (Eichengreen and Irwin, 2010). The Dutch-language literature contains some (mutually contradictory) assertions, with disagreement on two key issues.
First, was Dutch trade policy relatively open? Neytzell de Wilde and Moll (1936), Blaisse (1938) and Klemann (1990) argue that it was, and that any protection that did occur was largely ineffective; Brugmans (1961) and van Shaik (1986) argue that Dutch protection had a significant impact on imports. Second, did Dutch interwar protection help the Dutch East Indies more than Indonesian protection helped the Netherlands? The Dutch government at the time, and subsequent Dutch scholarship, argued that it did, while Indonesian politicians and scholars have argued that the balance of advantage was strongly in favour of the Dutch coloniser.
Detailed quantitative evidence is required to resolve such disputes. In this paper we provide such evidence, using a recently constructed commodity-level database of imports, tariffs, and non-tariff barriers to trade for both the Netherlands and the Dutch East Indies in the 1920s and 1930s (de Zwart et al., 2024). We use modern structural gravity methods to estimate trade elasticities and the ad valorem tariff equivalents of quotas and other non-tariff barriers to trade. We then embed these elasticities into detailed models of import demand for both economies, using CGE techniques as in earlier work on the British Empire (e.g. de Bromhead et al., 2019). Finally, we use these models to obtain counterfactual estimates of how imports would have changed, had trade policy remained unaltered after the onset of the Great Depression.
Trade policy in the interwar Dutch Empire was not relatively open: it lowered imports by at least as much as did British and Indian trade policy (the two natural comparators), if not more. Tariffs played a smaller role than in the British Empire, but this was outweighed by the large impact of quotas and other non-tariff barriers.
The impact of imperial preferences was highly asymmetric: the impact of Dutch protection on Indonesian exports to the metropole was much lower than the impact of Dutch East Indies protection on Dutch exports to its largest colony. To the extent that Indonesian exports to the Netherlands benefitted, this was largely the result of a deal whereby Unilever agreed to buy at least 60% of their oil needs from Indonesia. It seems that nationalist writers were correct: Dutch protection was highly unequal in its effects during this period.