French Oil Protectionism and the International Political Economy of Rent Seeking
41 Pages Posted: 10 Jan 2015 Last revised: 2 Sep 2015
Date Written: 2015
Quantitative protectionism, more precisely import substituting industrialization through quantitative trade restrictions, has been one of the most popular development policies of the 20th century. The researches led around Anne Krueger, based on scarce data from Third World countries, concluded on its overall inefficiency, caused by rising macroeconomic costs and rent capture. One of the most ambitious implementations of import substitution, French oil protectionism created detailed archival data which allow to quantify its costs and gains for more than half of the 20th century. We show that the yearly macroeconomic cost of the policy, an average of 3% of GDP, remained under control and gradually decreased from the 1960s. Detailed biases of quota allocations show that rent seeking linked to big companies and dominant geographical places remained limited. We show how the shifts in trade protection linked to the weight of social-administrative groups in quota juries brought the biggest imbalances to the system. After the discovery of oil in Algeria, social-administrative rent seeking increased the political instability of the Fourth Republic and peaked as soon as the end of the 1950s. Hence, in the case of French oil, quantitative protectionism was macroeconomically efficient in the long run, but created medium term political instability.
Keywords: Trade Protectionism, Import Substitution, Quantitative Restrictions, Oil, Rent capture, Rent seeking
JEL Classification: F13, N14, O14, O24, Q48
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