We recently came across a particularly egregious appeal for Kenya to turn to mercantilist policies to boost economic activity. The author calls for an “enforceable policy of protectionism to regulate what we export and to safeguard infant industries.”  The argument is not supported by any evidence of prior success through such policies. That is because there isn’t any.  There is no historical correlation between infant industry protection and improved national economic productivity. Furthermore it is highly unlikely that there ever will be- “protecting” domestic industry deters foreign investment, reduces consumers’ quality of living and encourages insular domestic industries that will never be able to compete because they are cut off from the more efficient global supply chains.

For protectionism to be economically productive it must pass two tests. Firstly, the Mill test requires protected sector will eventually be able to survive international competition without protection. Secondly, the Bastable test requires that the discounted future benefits compensate the current costs of protection. There are no examples of this happening on an economy wide scale. Even the semi-conductor market in Japan- once lauded as a great protectionist success story- has since been proven to have cost domestic Japanese consumers more in increased costs than was gained through increased output, thus resulting in a welfare loss.

“Buy Kenya”, “Buy American”, or “Buy Chinese” schemes are popular amongst those who stand to gain, but they will cost domestic consumers and businesses dearly. The example offered of the clothing markets is a case in point. Kenya’s cotton yield has been incredibly erratic as a result of inadequate irrigation and political disruption. Kenyan clothing manufacturers protest that they need “protection” from cheaper imports. If this happened millions of Kenyans would be unable to clothe themselves at the expense of a select few manufacturers. Instead, why not lower the barriers to trading that currently prevent Kenyan manufacturers from being competitive? If Kenyan tailors want to import cheap cotton from Mali, China or anywhere else it makes sense to allow them to do so. Then, as their costs of production decrease, everyone will benefit through cheaper clothes, higher sales and more employment.

Globalised trading is no longer “us vs them”. Rather it is characterised by mutually beneficial supply chains that stretch the world, allowing the most efficient producers to bring the cheapest goods to people who need and can afford them. Severing these chains reverses this process: Just ask those who have managed to “escape” North Korea or who can remember the destitution faced in East Germany prior to 1989. Who would wish to afflict such a fate upon Kenya- or anywhere else for that matter?