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Political competition and bilateral direct investments

Author

Listed:
  • YU Miaojie

    (China Center for Economic Research (CCER), Peking University, Beijing 100872, China)

Abstract

This paper investigates a basic question about the international political economy why is international trade not free? To answer this question, we modified Grossman and Helpman (1994) by considering that interest lobbies make political contributions to both the incumbent government and the political challenger in order to influence the incumbent government's choice of trade policy. By examining the contribution schedules under a framework of bilateral direct investments, we find that the modified Ramsey rule still holds under our setting

Suggested Citation

  • YU Miaojie, 2007. "Political competition and bilateral direct investments," Frontiers of Economics in China-Selected Publications from Chinese Universities, Higher Education Press, vol. 2(2), pages 250-274, June.
    • Handle: RePEc:fec:journl:v:2:y:2007:i:2:p:250-274
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    Download full text from publisher

    File URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-007-0014-0
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    Cited by:

    1. Kuang-Hann Chou & Chien-Hsun Chen & Chao-Cheng Mai, 2015. "Factors Influencing China's Exports with a Spatial Econometric Model," The International Trade Journal, Taylor & Francis Journals, vol. 29(3), pages 191-211, August.

    More about this item

    Keywords

    tariffs; political contributions; bilateral direct investments;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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