Azcárraga’s critique of mercantilism: trade as an engine of growth

Abstract

Manuel Azcárraga y Palmero's La libertad de comercio en las islas Filipinas (1872) was an unequivocal and consistent tract advocating free trade as a commercial policy for the Philippines. It is remarkable for its explicit and frequent reference to free-trade theory and the example of other nations (notably Britain and its colonies) as a guide to policy. It uses a historical approach in its critique of Spanish mercantilist ideas and biases, which are held responsible for centuries of foregone development opportunities for the Philippines. This article traces Azcárraga’s arguments and links them to Smith’s [1776] theory of international trade and its later elaborations (Myint [1958, 1977] and Schumacher [2015, 2016]). The protectionist mindset and policies Azcárraga believed to have held back Philippine progress one hundred !fty years ago are a striking portent of issues hounding the country’s development in the 20th century and even later.

JEL classification: B12, B17, B31, F13, N75