Kicking Away the Ladder. Development Strategy in Historical Perspective

However, before this period, Belgium was considerably more protectionist than the Netherlands or Switzerland (see below). During the first three-quarters of the eighteenth century, the Austrian government, which then ruled what was later to become Belgium, protected it strongly from British and Dutch competition and invested in industrial infrastructure.[157] During the early nineteenth century it was subject to active ITT policies as part of the United Kingdom of the Netherlands (1815-30) under William I (see below). Moreover, until the 1850s, some industries were quite heavily protected – tariffs reached 30-60 per cent for cotton, woollen and linen yarn, and 85 per cent on iron. Its Corn Law was only abolished in 1850.[158]

B. The Netherlands

During the seventeenth century the Netherlands was the world’s dominant naval and commercial power; during this period, its ‘Golden Century’, the Dutch East India Company outshone even the British East India Company. However, its naval and commercial strength showed a marked decline in the eighteenth century, the so-called ‘Periwig Period’ (Pruikentijd), with its defeat in the 1780 Fourth Anglo-Dutch War symbolically marking the end of its international supremacy.[159]

It is not easy to explain why the Netherlands failed to translate its naval and commercial strengths into industrial and overall economic domination. Part of the reason must have been that it was simply the natural thing to do – when you have a world-class commercial basis like, say, Hong Kong today, why bother about industry? However, the British government exploited similar strengths to the full in developing its industries (for example, it passed various Navigation Acts .that made it compulsory to ship goods in and out of Britain on British vessels). So why did the Netherlands not do the same? That they did not is especially puzzling, given that the Dutch state had not been shy of using aggressive ‘mercantilist’ regulations on navigation, fishing, and international trade when it was trying to establish its commercial supremacy in the sixteenth and early seventeenth centuries.[160]

Many explanations for this have been offered: high wages due to heavy consumption taxes; lack of coal and iron deposits; the decline of entrepreneurship and the rise of a rentier mentality; and conspicuous consumption, to name just a few. Some historians have also suggested that Belgium’s industrial strength was always an obstacle to neighbouring Netherlands’ industrial development.[161] Most interestingly, List suggests that the Netherlands’ relative decline was due to its failure to construct the set of public policies and institutions necessary for industrial development; Wright meanwhile proposes that low tariffs hampered the development of Dutch industries.[162]

Whatever the exact cause was, the Netherlands failed to industrialize to the same extent as its competitor countries, Britain, Germany and Belgium. Nevertheless, thanks to the strengths of its commercial network, it remained one of the richest countries in the world until the early twentieth century.[163]

One exception to the policy paralysis that seemed to have gripped the Netherlands between the late seventeenth and early twentieth centuries was the effort made by King William I (1815—40). William I established many agencies providing subsidized industrial financing, the most important of which was the Netherlands Trading Company (Nederlandsche Handels-Maatschappij) set up in 1824. The Company supported Dutch industries by means of targeted procurement policies (especially in sugar refining, shipbuilding and textiles), using the profits from its monopoly trade with the colony of Java, which from 1831 onward was forced to produce cash crops such as coffee, sugar and indigo.[164] William I also founded the Fund for the National Industry (1821), the Amortisation Syndicate (1822), and the General Society for Furthering the National Industry (1822). During the 1830s, strong state support was also provided for the development of modern cotton textile industry, especially in the Twente region.[165]