Report on Analysis of Works in Chapter: The Smoot-Hawley Tariff and Institutions in Economic Growth
]1. Introduction
This report provides an in-depth analysis, critique, and evaluation of two significant works presented in the chapter:
Barry Eichengreen’s examination of the Smoot-Hawley Tariff and Douglass C. North’s exploration of the role of
institutions in economic growth. Each work offers unique insights into the interplay of economics, politics, and
institutions and highlights the complex factors driving historical economic policy decisions and long-term
development trajectories.
2. Analysis of Barry Eichengreen’s Work on the Smoot-Hawley Tariff
Eichengreen’s work delves into the domestic and international political economy surrounding the passage of the
Smoot-Hawley Tariff Act of 1930. His primary thesis asserts that this tariff was not merely a result of party politics
or pork-barrel politics, but rather a product of intricate coalitions between interest groups. Specifically, Eichengreen
argues that agricultural and industrial sectors allied to exert pressure on Congress for high protective tariffs,
influenced by both national economic challenges and international market shifts.
Key Points:
• Eichengreen illustrates how both agricultural and industrial groups, each with unique motives, found common
ground in pushing for the tariff, with agricultural interests seeking relief from foreign competition and certain light
industries desiring insulation from imports.
• He contextualizes the act within the Great Depression, positing that economic hardship further strengthened the
coalition’s determination to enact protectionist measures, which they saw as essential for economic stability.
Critique:
While Eichengreen’s work is thorough, it could benefit from a deeper exploration of the broader implications of the
Smoot-Hawley Tariff on global markets. While he emphasizes the internal pressures leading to its adoption, there is
limited analysis on how international responses to the tariff might have affected U.S. economic policy or contributed
to the length and severity of the Great Depression.
Suggestions for Further Research:
Further research could examine:
• The global economic ripple effects of the Smoot-Hawley Tariff, particularly on countries heavily reliant on trade
with the U.S.
• Comparative studies on how other protectionist policies have influenced international trade and economic
relations in various historical contexts.
• The evolution of protectionist sentiment in contemporary trade policy, investigating whether similar patterns of
interest group coalitions exist in today’s economy.
3. Analysis of Douglass C. North’s Work on Institutions and Economic Growth
Douglass C. North’s work focuses on the significance of political institutions as determinants of economic growth,
with an emphasis on the development of secure property rights and the structure of governance. North contrasts the
institutional evolution of England and Spain, arguing that England’s development of parliamentary checks on the
monarchy facilitated economic growth by ensuring stable property rights. In contrast, Spain’s centralized monarchy
and bureaucratic structure ultimately stifled growth.
Key Points:
• North’s theoretical framework positions institutions as central to economic performance, where well-defined and
enforced property rights promote economic exchange, specialization, and growth.
• He underscores how informal norms and formal rules interact to shape institutional reliability and economic
outcomes, noting that efficient institutions reduce transaction costs and encourage productivity.
• Through a historical lens, North traces how the institutional paths of England and Spain diverged, leading to long-
lasting economic impacts in their respective colonial empires in North and South America.
Critique:
North’s analysis is compelling in its broad historical scope and clarity in connecting political structures to
economic outcomes. However, it might benefit from incorporating more case studies where institutional resilience
or adaptability in adverse conditions led to economic growth. Additionally, his focus on England and Spain provides
a clear narrative, but the limited regional comparison may not account for alternative institutional models that could
also support economic success.
Suggestions for Further Research:
Potential avenues for expanding on North’s work include:
• Analyzing cases in which countries with initially weak institutions managed to achieve economic growth,
examining factors that allowed them to overcome structural limitations.
• Investigating how globalization impacts the evolution of institutional frameworks in developing countries today,
particularly regarding property rights and governance.
• Conducting longitudinal studies on institutional adaptability in response to modern economic crises, such as the
2008 financial crisis or the COVID-19 pandemic.
4. Personal Perspective and Recommendations for Further Research
The works by Eichengreen and North reveal that economic policies and outcomes are deeply interwoven with
societal structures, interest group dynamics, and institutional development. Their analyses underscore the
importance of examining both formal institutions and the nuanced influence of interest groups when assessing
economic policy decisions and growth trajectories.
Future Research Recommendations:
• Comparative Institutional Analysis: Future research might focus on comparing institutional resilience in
developing countries to understand how political stability and rule of law contribute to economic resilience and
growth in different contexts.
• Contemporary Interest Group Dynamics: Analyzing how modern interest groups influence trade policies and
protectionist measures can offer insights into the durability of protectionism in today’s globalized economy.
• Institutional Innovation and Crisis Response: Studies on how institutions in various countries have adapted to
recent global crises (e.g., financial and health crises) could provide insights into the mechanisms that foster
institutional adaptability and economic recovery.
5. Conclusion
Eichengreen’s and North’s analyses provide valuable perspectives on the forces shaping economic policy and
growth. Eichengreen’s study of the Smoot-Hawley Tariff emphasizes the role of interest group alliances in shaping
protectionist policy, while North’s work underscores the critical importance of institutional stability and security in
fostering economic growth. Both authors highlight the need for further investigation into the relationships between
political dynamics, institutions, and economic outcomes, making a strong case for continued research in these areas.
This structured report consolidates the main points, critique, and recommendations related to both works, while also
suggesting further avenues for research based on the insights provided by Eichengreen and North.
The report provides a good summary of the two works. It also gives comments, evaluations and
suggestions for further research. It would be interesting if the report addresses how the two
works relate to each other and provide more insights for each other, since one adopts the
traditional economic historian’s approach of detailed case study while other is a work of the new
economic history leading scholar and uses a macro historical approach. Furthermore, the report
has not touched on how both works related to various theories of international relations, such as
the power stability theory. On a whole, a short and good report. However, the format needs much
improvement. It is not a good practice to write a report mainly in bullet form.
