Tariffs and Industrialization

Tariffs govern the importation and exportation of goods and services, mostly between
countries or states. Countries usually produce tariffs that protect their goods and services. This,
in a way, promotes the local production and grows the economies of such countries.
Industrialized countries like the United States, Japan, and the European countries have tariffs that
favor importing raw materials and discourages the importation of finished products as you move
on a scale from raw material to finished products the tariffs increase (Petroski et al., 2017). This
situation has led to developing countries' stagnation as they lack the markets to sell their
products. They end up opting to consume than manufacture hindering industrialization in such
countries.
The developed nations have tariffs that restrict the import of consumer goods and
textiles. Japan is the only country that does not restrict imports of materials. Consumer goods
face stiff tariffs because they compete with locally manufactured products, which is not
favorable. The tariffs against manufacturers in agriculture are not significant. Industrialized
countries in agricultural products frequently use nontariff protection. The developed countries do
not make harsh tariffs on farm products because they are used as raw materials in these
countries, promoting their economies. To some, the taxes extend discrimination on the
industrializing nations (Petroski et al., 2017).
In 1975, the international Trade Commission released nominal tariffs that facilitated
effective protection from the nontariff Barriers to trade (NTB). These tariffs relaxed the taxes in
the countries and allowed exchange between them in a healthier environment. Developed
countries did not take this advice and opted to follow their tariffs to trade. According to Mgeni et
al. (2019), it is clear that the taxes in the developed countries are due to pressure on the

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policymakers to make restrictions on trade to manufacturers who wants to export goods to the
nations. The source states that developed countries are trying to reduce competition.
Developing countries should liberate themselves by doing the following; making laws
that attract foreign investors. These laws will attract investors from developed countries to do
local manufacturing, leading to industrialization in developing countries. Bigsten et al. (2016)
says that some countries in Africa like Tanzania and Ethiopia are doing this. Countries like
China and India have gained considerably from such laws, and their economies are doing just
fine. The other way is by making tariffs that allow free trade that includes privation, lower taxes,
and encourage the private sector to invest in their countries. Doing export-oriented development
is key to industrialization. Developing countries should not only focus on producing agricultural
products and other raw materials, but they should also do the processing and even selling
finished products to the other nations (Bigsten et al., 2016). This promotes industrialization in
such countries.

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References

Bigsten, A., Gebreeyesus, M., & Söderbom, M. (2016). Tariffs and firm performance in
Ethiopia. The Journal of Development Studies, 52(7), 986-1001.
Mgeni, C. P., Müller, K., & Sieber, S. (2019). Tariff impact on industrialization in Tanzania:
Evidence from edible oil sub-sector. J. Econ. Sust. Dev, 10, 15-30.
Petreski, M., Jovanovic, B., & Velickovski, I. (2017). Tariff-induced (de) industrialization: An
empirical analysis. Comparative Economic Studies, 59(3), 345-381.