The economic consequences of government intervention in the international steel industry

Michael Olsher, Fordham University


Government intervention has exerted a pervasive influence in altering the patterns of growth in global steel trade in the post World War II era. The geographical realignment of expanded steel production away from the United States has been distinctive and material. In 1950, the United States accounted for nearly one-half of world steel output. In 1988, only 15 percent of total production is manufactured in the United States and it is forecasted that in the next years, this percentage will decline even further.^ The dissertation approaches these substantial changes from a global point of view with an emphasis on the altered position of the United States steel industry as well as its prospects for the future in the world marketplace. The examination of this issue is first conducted on a regional basis through an overview of the historical development in the post World War II period of the Japanese, European and Third World steel industries. Following the overview, 18 individual country profiles are developed including those of the Soviet Union and the Eastern Bloc, eight members of the European Economic Community, Austria, Japan and eight of the most important emerging steel producers in the Third World (i.e. China, Brazil, South Korean and Venezuela).^ The country by country examination is followed by an analysis of causes and methods of government intervention and a discussion on the impact of the specific issues of the dumping agreement, exchange rate fluctuations and the national interest question as they pertain to world steel trade. With the steel industry highlighted as perhaps a special case, the effects of protectionism on trade are evaluated.^ Results provide strong evidence that government intervention in the post World War II period has been an important factor endangering the continued existence of private sector steel companies, specifically those in the United States. It is demonstrated that additional international cooperation, increasing trade in semi-finished steel and meaningfully addressing specific difficult-to-finance capital needs are essential to the survival of the United States steel industry. International joint ventures among steel producers are encouraged as a method of promoting constructive, less protectionistic trade in steel. ^

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Recommended Citation

Olsher, Michael, "The economic consequences of government intervention in the international steel industry" (1988). ETD Collection for Fordham University. AAI8818471.