Golson, Eric
(2011)
The economics of neutrality: Spain, Sweden and Switzerland in the Second World War.
PhD thesis, London School of Economics and Political Science.
Abstract
Neutrality has long been seen as impartiality in war (Grotius, 1925), and is
codified as such in The Hague and Geneva Conventions. This dissertation
empirically investigates the activities of three neutral states in the Second World
War and determines, on a purely economic basis, these countries actually
employed realist principles to ensure their survival. Neutrals maintain their
independence by offering economic concessions to the belligerents to make up
for their relative military weakness. Depending on their position, neutral
countries can also extract concessions from the belligerents if their situation
permits it.
Despite their different starting places, governments and threats against
them, Spain, Sweden and Switzerland provided similar types of political and
economic concessions to the belligerents. This thesis comparatively investigates
neutral trade, labour and capital. Using standardized trade statistics, this study
shows that while all three neutrals were dependent on the Germans for most
basic goods, they were generally able to benefit from relative gains in prices and
excess imports of goods in periods of German weakness. In trade with the Allies,
at least two of the three countries permitted the illicit export of items necessary
for the Allied war effort, and did so at reduced relative prices.
All three neutrals benefitted from substantial services revenue and
positive balance of payments in all of their belligerent relationships. In several
cases the neutrals were able to force the belligerents to cover their balance of
payments deficits in gold because they needed to maintain access to the neutral
markets. The final chapters demonstrate that despite political promises, the
Spanish and Swiss governments constructed labour transfer systems to limit the
number of workers for Germany.
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