Dynamics of Interventionism and Economic Development in Quebec before 1854

27 Pages Posted: 22 Dec 2020 Last revised: 3 Dec 2021

See all articles by Vincent Geloso

Vincent Geloso

George Mason University - Department of Economics

Date Written: October 23, 2020

Abstract

The theory of interventionism argues that government interventions are inherently destabilizing which helps explain the growth of government. I argue that the theory of interventionism is also useful process of economic growth. At first, an intervention reduces living as a level change. However, because the intervention alters entrepreneurial incentives, there is a second effect that decelerates economic growth (Czegl├ędi 2014). Any additional intervention to deal with the distortions generated by initial interventions merely accentuates these two effects. Thus, the dynamics of interventionism entail a cumulative process of divergence. To illustrate my argument, I use the example of milling regulations in colonial Quebec. Directly, these regulations reduced the quantity and quality of milling services. However, indirectly, they altered long-run specialization patterns notably in dairy production. As dairy exports later boomed due to exogenous factors, this alteration eventually led to greater divergence.

Keywords: Dynamics of Interventionism, Canadian Economic History, Dairy Production

JEL Classification: N51, N41, D24

Suggested Citation

Geloso, Vincent, Dynamics of Interventionism and Economic Development in Quebec before 1854 (October 23, 2020). GMU Working Paper in Economics No. 21-47, Available at SSRN: https://ssrn.com/abstract=3717700 or http://dx.doi.org/10.2139/ssrn.3717700

Vincent Geloso (Contact Author)

George Mason University - Department of Economics ( email )

4400 University Drive
Fairfax, VA 22030
United States

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