First World Autarky

I’ve been doing some research on tariff structures between nations of different income groups, and I decided to do a quick comparison between three highest income economies and three low income economies that also have access to interest-free, concessional loans from the World Bank. I just wanted to do a simple illustration of the consistent application of tariffs that characterizes low income tariff structures and the more discretionary tariff structure of developed nations. The logic is that lower income countries use tariffs as an easy method of accruing tax revenue, whereas wealthier governments can rely more in income taxes. The data is shown below. The average rates are “most favored nation” rates, which is the tariff rate which applies to all WTO trading partners.

six country ag tariff data

The EU has relatively high tariff rates on agricultural products, but the pattern between the EU and the US is similar — they have their highest tariffs on certain products, which are usually labor-intensive and politically well-establish. Apart from “coffee and tea,” Israel doesn’t really fit this characterization. Before making a claim that may only apply to the EU and the US, I wanted to see why Israel has such high import duties placed against agricultural imports.

It turns out that Israel has been following a policy of agricultural autarky,

Israel’s initial years were characterized by chronic shortages of food. As the nascent State of Israel was absorbing hundreds of thousands of refugees from Arab lands, it faced a boycott from its Muslim neighbors. Domestic food production was inadequate, and proteins in particular were in short supply. Strict rationing of basic food supplies by the central government spawned a black market for a variety of staples. This period of collective hardship, known locally as the Tsenah, left an imprint on the national psyche. The residual effect of this trauma was a national commitment to agricultural self-reliance that has survived for fifty years.

— Tal, A. (2007). To Make a Desert Bloom: The Israeli Agricultural Adventure and the Quest for Sustainability. Agricultural History, 81(2), p. 239.

It would be an interesting analysis as to whether or not self-sufficiency is really the best means towards the end that Israel wants to achieve (being able to feed its people in times of siege). I also wonder on the welfare payoff of a greater consumer surplus by opening Israel to a competitive international market, weighed against the costs of food shortages during a state of war (multiplied by the probability of such a war ever occurring).

Edit: Another high income OECD member that doesn’t fit my rule is South Korea. They have a tariff structure that is similar to Israel’s. I’ve read that this is a product of a politically tensioned transition from an agricultural to an industrial economy during the past six decades.

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