Import tariffs: the neutralization of the Dutch disease argument

Abstract

ABSTRACT In economics, there is just one argument legitimising import tariffs - the infant industry argument -, but it ceases to be valid as the required learning time ends. This note offers a second argument: the neutralisation of the Dutch disease argument. If the country faces this competitive disadvantage, import tariffs and export subsidies may be a way of circumventing the problem. Many countries that industrialised were only successful because they pragmatically neutralised the disease with import tariffs.