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Why Portugal?

January 19, 2004

"Britain began to prohibit or seriously tax French wine imports in the late 1600s, allowing local beverage makers to earn enormous rents. Moreover, British investments in Portugal formed another interest group that benefited from protection by switching to wine production. The British had long tried to develop a wine industry in Portugal to serve as a bulwark against France... but only prohibitions and exorbitantly high tariffs (about 55 times the price of vin ordinaire in the early 1700s) made such investments in Portugal viable." (John Vincent Nye, "Reply to Irwin on Free Trade," Journal of Economic History, 53, 1 (March 1993), p. 155.)

This suggests that Ricardo's choice of Portugal was rather odd as an example of the logic of free trade. The logic itself remains, one guesses, unimpeached.


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