Studies in the Interwar European Economy by Derek H. Aldcroft

Author:Derek H. Aldcroft [Aldcroft, Derek H.]
Language: eng
Format: epub
Tags: History, General
ISBN: 9780429782336
Google: egGaDwAAQBAJ
Publisher: Routledge
Published: 2019-05-23T01:35:32+00:00

The inflexibility of the export product structure takes on an added significance if we consider the effects of both import substitution and changes in competitive shares. The failure to modernise the production structure meant that European countries faced two adverse influences simultaneously: an inability to compete in expanding sectors in the high income markets, and the effects of import substitution in contracting sectors in the lesser developed countries. Thus the heaviest setbacks after the war occurred in the expanding commodity groups of machinery and transport equipment, and only in a few protected markets was Europe able to maintain its relative position. In the contracting sectors, textiles were the main problem area, especially for Britain and Switzerland since these goods bulked large in total exports in 1913. They were severely hit by import substitution in Asia and Latin America, and also from Japanese competition (see Table 4.14).

Overall the biggest losses through import substitution and competitive market shares occurred in the larger countries - the UK, Germany and France. Britain was by far the worst sufferer in both respects because of her heavy dependence on textiles and other basic sectors vulnerable to import substitution, but also because of general inefficiency in manufacturing and the impact of a high exchange rate after 1925. Britain in fact lost trade share in all main markets and in all major commodity groups. Germany also suffered quite heavily from import substitution and competitive handicaps; she experienced losses in most major markets except non-industrial countries, and in most commodity groups, though with some relative strength in the expanding sectors to Western Europe and non-industrial countries. French losses were mainly confined to import substitution since she displayed relative strength in trade with Western Europe and non-industrial countries in both expanding and stable sectors (Maizels, 1963).

As far as the smaller countries are concerned (Belgium, Italy, The Netherlands, Sweden and Switzerland), the effects of import substitution were quite serious, but there was some compensation from overall relative strength in competitive shares. The record in the latter respect was somewhat mixed, however. Sweden did particularly well in the main markets and commodity groups as a result of her dynamic product structure. Switzerland, by contrast, experienced market losses, while Belgium and Italy managed a slight improvement of their shares in manufacturing trade (Maizels, 1963).

Table 4.14 Intra-trade of the industrial countries in manufactures (percentage changes)

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