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What Does the Political Economy Literature on Trade Policy (Not) Tell UsThat We Ought To Know?

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  • Dani Rodrik

Abstract

Three questions lie at the core of the large and distinguished literature on the political economy of trade policy. First, why is international trade not free? Second, why are trade policies universally biased against (rather than in favor of) trade? Third, what are the determinants of the variation in protection levels across industries, countries, and institutional contexts? These questions are handled only imperfectly by the existing literature. Current models treat trade policy as a redistributive tool, but do not explain why it emerges in political equilibrium in preference over more direct policy instruments. Further, existing models do not generate a bias against trade, implying that pro-trade interventions are as likely as trade-restricting interventions. The greatest contribution of the political economy literature may lie in developing a better grasp of normative economic analysis--that is, in helping design policies, rules, and institutions.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4870.

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Date of creation: Sep 1994
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Publication status: published as "The Political Economy of Trade Policy," 1996, in G. Grossman and K.Rogoff,eds., Handbook of International Economics, Vol. III, North-Holland, Amsterdam.
Handle: RePEc:nbr:nberwo:4870

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Cited by:
  1. Figueroa, Enrique E., 1996. "The Competitiveness of Mexican and Caribbean Basin Horticultural Products in the U.S. Market," Staff Papers, Cornell University, Department of Applied Economics and Management 121181, Cornell University, Department of Applied Economics and Management.
  2. Bagwell, K. & Staiger, R.W., 1996. "Reciprocal Trade Liberalization," Working papers, Wisconsin Madison - Social Systems 9602, Wisconsin Madison - Social Systems.
  3. Piazolo, Daniel, 1995. "The impact of regionalism on the multilateral trading order: French tariff bargaining in the Uruguay Round," Kiel Working Papers 705, Kiel Institute for the World Economy.
  4. Joseph F. Francois & Will Martin, 1998. "Commercial Policy Uncertainty, the Expected Cost of Protection, and Market Access," Tinbergen Institute Discussion Papers 98-059/2, Tinbergen Institute.
  5. Scott Bradford, 2000. "Rents, Votes, and Protection: Explaining the Structure of Trade Barriers Across Industries," Econometric Society World Congress 2000 Contributed Papers, Econometric Society 1717, Econometric Society.
  6. Levy, Philip I., 1999. "Lobbying and international cooperation in tariff setting," Journal of International Economics, Elsevier, Elsevier, vol. 47(2), pages 345-370, April.
  7. Marcel Vaillant, 1998. "Endogenous number of lobby groups in a specific factor trade model," Documentos de Trabajo (working papers), Department of Economics - dECON 0198, Department of Economics - dECON.
  8. Gil S. Epstein & Shmuel Nitzan, 2002. "Political Culture and Monopoly Price Determination," CESifo Working Paper Series 646, CESifo Group Munich.
  9. Ramkishen Rajan, 1996. "Measures of intra-industry trade reconsidered with reference to Singapore’s bilateral trade with Japan and the United States," Review of World Economics (Weltwirtschaftliches Archiv), Springer, Springer, vol. 132(2), pages 378-389, September.
  10. Karp, Larry, 1995. "The Direction and Timing of Agricultural Trade Refonn in Central and East Europe," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series, Department of Agricultural & Resource Economics, UC Berkeley qt9z61f67x, Department of Agricultural & Resource Economics, UC Berkeley.
  11. Pravin Krishna & Devashish Mitra, 2003. "Reciprocated Unilateralism in Trade Policy: An Interest-Group Approach," NBER Working Papers 9631, National Bureau of Economic Research, Inc.
  12. Bernardes, Luis G., 2003. "Reference-dependent preferences and the speed of economic liberalization," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, Elsevier, vol. 32(5), pages 521-548, November.
  13. Sturzenegger, Federico, 1995. "Endogenous learning and trade policy," Economics Letters, Elsevier, Elsevier, vol. 49(4), pages 429-433, October.

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