Reversing Globalization: Trade Policy Consequences of World War I
| Author | Shale Horowitz |
| DOI | 10.1177/1354066104040568 |
| Published date | 01 March 2004 |
| Date | 01 March 2004 |
| Subject Matter | Journal Article |
Reversing Globalization: Trade Policy
Consequences of World War I
SHALE HOROWITZ
University of Wisconsin-Milwaukee
How did World War I reverse decades of apparently irresistible
economic globalization? Why, in particular, did World War I produce a
worldwide surge in international trade protection? Three mechanisms
are investigated: (1) The War diverted production and international
trade in a way that strengthened protectionist coalitions of industries
relative to free-trading coalitions. (2) The War reduced financial
interdependence and altered exchange rates in a manner that advan-
taged protectionist coalitions. (3) The War altered military alliances and
rivalries such that stronger national interests in trade protection
developed. These mechanisms are examined for the five largest trading
economies — Britain, France, Germany, Japan, and the United States.
There is evidence of all three mechanisms operating. The first —
involving war-induced diversion of production and international trade
— appears to have had the largest and most consistent impact.
K
EY
W
ORDS
♦Britain ♦economic interest groups ♦France ♦
Germany ♦globalization ♦international trade policy ♦Japan ♦
military interests ♦United States ♦World War I
We live in a time of apparently relentless advance of economic globalization,
in which national economies are becoming increasingly dependent on
international trade and investment flows. But many are aware that the
present is not the first such period. Most recently, globalization also
appeared ascendant in the last decades before World War I. So it is especially
interesting today to look back and try to understand how World War I began
the process of reversing high and rising tides of international trade and
investment — a process that continued during the Great Depression and
World War II. The precise focus here will be on how World War I affected
the international trade policies of the five largest trading economies —
European Journal of International Relations Copyright © 2004
SAGE Publications and ECPR-European Consortium for Political Research, Vol. 10(1): 33–59
DOI: 10.1177/1354066104040568]
Britain, France, Germany, Japan and the United States. The war’s effects on
international investment are examined only insofar as they contributed to
changes in international trade policies.
Many have discussed the economics of fighting large-scale, protracted wars
(e.g. Hardach, 1977; Mendershausen, 1943; Pigou, 1941), and others have
looked at how the consequences of World War I contributed to the Depression
of the 1930s (e.g. Eichengreen, 1990, 1992; Kindleberger, 1973; Temin,
1989). Here the goal is to develop theory on the mechanisms by which
protracted warfare among a number of large trading states would be expected
to change trade policies, and to provide a preliminary test by examining trade
policy change in the five largest trading states following World War I.
The political economy literature highlights three main ways in which
shocks such as a world war might be expected to affect international trade
policies. The first is through war-related changes in the pattern of productive
activity. This might be expected to affect the relative strength of industries or
sectors lobbying for free trade and for protection (Gourevitch, 1986;
Rogowski, 1987). The second is through financial changes, particularly in
the size of foreign asset stocks and in exchange rate policies (Frieden, 1991;
Simmons, 1994; Sachs, 1985). Third, war-related changes in the pattern of
military alliances and rivalries might also be expected to have an impact
(Gowa, 1994). For the period after World War I, there is evidence that all
three of these factors played roles in the general postwar trend towards
increased protection. Of the three factors, the first, war-induced changes in
production patterns, appears to have the strongest effect in the aggregate
and the most consistent effects cross-nationally.
The following section sets out hypotheses about how world war would be
expected to affect trade policy through the productive, financial and military
mechanisms. The next sections provide a preliminary empirical test by
looking at Britain, France, Germany, Japan and the United States following
World War I. First, prewar trade policies and postwar trade policy changes
are summarized. Then changes in each of the three independent variables are
examined to see if they affected trade policy formation in the hypothesized
directions. Then the relative importance of the three influences is assessed by
looking at their directional effects and at the political processes of trade
policy change. The conclusion discusses some implications for explaining the
trade policy effects of World War II, and suggests avenues for future
theoretical inquiry.
How World War Influences Trade Policy
Financial and real economic influences and military influences on trade
policy all operate through the political system. The simplest way of tracing
European Journal of International Relations 10(1)
34
Get this document and AI-powered insights with a free trial of vLex and Vincent AI
Get Started for FreeStart Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
