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How did US and EU trade policy withstand the Great Recession?

Chad P Bown's picture

Many feared a return of 1930s-style protectionism when recession hit the global economy. But many countries avoided this. In a blog post, co-authored with Meredith Crowley, I focus on US and EU trade policy and discuss how this policy withstood the ‘Great Recession.’ The following is an excerpt from the post which appeared on Vox.

“During the Great Recession, import protection increased around the world (Evenett, 2011). Popular policies included antidumping tariffs, safeguards, and other temporary trade barriers (Bown 2011a,b). Despite this, for high-income economies such as the US and EU, such trade barriers increased much less than initially feared. In this column, we ask how and why.

The Great Recession – Lessons from 10 Countries

Vamsee Kanchi's picture

How did developing countries fare during the crisis and what are their medium term prospects? These questions are at least partly answered in a new book covering 10 countries. Titled 'The Great Recession and the Developing Countries: Economic Impact and Growth Prospects,’ the book analyzes the  growth before, during and after the crisis of Brazil, China, Ethiopia, India, Malaysia, Mexico, Philippines, Poland, Turkey, and Vietnam.

The book’s editor, Mustapha Nabli, estimates that the average potential growth rate for the ten countries before the financial crisis was about 6 percent.  Unlike the overheated financial sector, pre-crisis trade and remittance levels were sustainable.
Once the crisis hit, however, less diversified countries really felt the heat. Their financial sectors eventually recovered, but trade remained low, thus adversely affecting their growth.  13.6 percent of Turkey’s 2009 GDP, for example, was shaved off during the financial crisis.  Possibly this was due in part to fears left over from past financial crises.