International Competition and Adjustment: Evidence from the First Great Liberalization
The Cobden-Chevalier treaty of 1860 eliminated French import prohibitions and lowered tariffs on France in Britain. Policy change was unexpected by French industry and entirely free from lobbying. A series of commercial treaties with other nations followed because of the (first-ever) use of an MFN clause. Post-1860 we find a significant rise in intra-industry trade. Rising imports met with higher exports. Liberalization allowed for an expansion of exports in differentiated products instead of eliminating French exports. The findings are consistent with the “smooth adjustment” hypothesis. Anti-competitive, protectionist lobbying apparent from 1878 was not a backlash to international competition.
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Document Object Identifier (DOI): 10.3386/w25173