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Infant Industry And Political Economy Of Trade Protection

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  • Bin Xu

Abstract

. This paper introduces infant‐industry considerations in political economy determination of trade protection. I build a model where the government cares about both political contributions and national welfare. A potentially beneficial high‐tech industry is not viable in the country whose initial human capital is low. In the political economy equilibrium, we find that the tariff schedule will be V‐shaped: it decreases initially to maintain the viability of the industry but increases thereafter as the industry expands and gains political power. We use the model to explain both China's tariff offers in WTO negotiations and GATT/WTO rules regarding developing countries.

Suggested Citation

  • Bin Xu, 2006. "Infant Industry And Political Economy Of Trade Protection," Pacific Economic Review, Wiley Blackwell, vol. 11(3), pages 363-378, October.
    • Handle: RePEc:bla:pacecr:v:11:y:2006:i:3:p:363-378
    DOI: 10.1111/j.1468-0106.2006.00320.x
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    1. Corden, W. Max., 1997. "Trade Policy and Economic Welfare," OUP Catalogue, Oxford University Press, edition 2, number 9780198775348.
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    Cited by:

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    2. Irina Ervits, 2023. "CSR reporting in China’s private and state-owned enterprises: A mixed methods comparative analysis," Asian Business & Management, Palgrave Macmillan, vol. 22(1), pages 55-83, February.

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