'Before Your Fountains' - Import Substitution, Oil Quotas and Rent Seeking in France (1920's-1970's)
65 Pages Posted: 15 Dec 2013 Last revised: 14 Jan 2014
Date Written: March 1, 2013
This study re-assesses the most popular development policy of the 20th century, import substitution industrialization through quantitative restrictions of trade flows. The researches of Anne Krueger and Jagdish Bagwhati about quantitative restrictions in emerging countries concluded on their inefficiency, caused by rising rent capture by dominant companies, cities and social groups. In terms of volume though, developped countries accounted for the largest part of trade quantitative restrictions. Among them, France concentrated the most important restricted trade in volume, especially in the oil sector, its first trade post. This case-study of French oil products import quotas, based on new archival evidence, concludes on the macroeconomic effiency of this policy. We show that, contrary to the cases analysed by Anne Krueger and Jagdish Bagwhati, the industrialization rent and the rent capture remained low and diminished over time. The real problem was the endogenous imbalance of rent capture decomposition between agents of the system and the political risks it fostered. This imbalance mostly favored big companies, Paris to a lesser extent, and the Mines engineers around the “Corps des Mines”.
Keywords: Import Substitution, Quantitative Restrictions, Oil, Rent Capture, Rent Seeking
JEL Classification: F13, N14, O14, O24, Q48
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