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Political Institutions and Trade Protection

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  • H.J. Roelfsema

Abstract

Why do levels of trade protection differ so much across countries? We argue that differences in electoral rules and executive powers may play a significant role. We develop a theoretical model and show that countries that have a majoritarian electoral system may be more inclined to have a high level of trade protection. The reason is that these countries have fiercer competition for swing districts if compared to countries that have a proportional electoral system. In the empirical part of the paper we show that countries that have a majoritarian electoral system indeed have higher levels of protection. This result is robust to various measures of trade protection and to an instrumental variables approach that takes account of the endogeneity of political institutions. We find only weak support for the claim that presidentialism reduces trade protection.

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Bibliographic Info

Paper provided by Utrecht School of Economics in its series Working Papers with number 04-06.

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Date of creation: 2004
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Handle: RePEc:use:tkiwps:0406

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Keywords: Trade Policy; Protection; Constitutional Political Economy; Electoral Rules;

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References

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  1. Marius Brülhart, 1998. "Trading Places: Industrial Specialization in the European Union," Journal of Common Market Studies, Wiley Blackwell, vol. 36(3), pages 319-346, 09.
  2. Marius Brülhart, 2001. "Evolving geographical concentration of European manufacturing industries," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 137(2), pages 215-243, June.
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  4. Dixit, Avinash K & Londregan, John, 1994. "The Determinants of Success of Special Interests in Redistributive Politics," CEPR Discussion Papers 1054, C.E.P.R. Discussion Papers.
  5. André Sapir & Richard Baldwin & Daniel Cohen & Anthony Venables, 1999. "Market integration, regionalism and the global economy," ULB Institutional Repository 2013/8074, ULB -- Universite Libre de Bruxelles.
  6. Dutt, Pushan & Mitra, Devashish, 2002. "Endogenous trade policy through majority voting: an empirical investigation," Journal of International Economics, Elsevier, vol. 58(1), pages 107-133, October.
  7. Persson, Torsten & Tabellini, Guido, 1999. "The size and scope of government:: Comparative politics with rational politicians," European Economic Review, Elsevier, vol. 43(4-6), pages 699-735, April.
  8. Rodrik, Dani, 1995. "Political economy of trade policy," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 28, pages 1457-1494 Elsevier.
  9. Dani Rodrik, 1998. "Why Do More Open Economies Have Bigger Governments?," Journal of Political Economy, University of Chicago Press, vol. 106(5), pages 997-1032, October.
  10. V. V. Chari & Larry E. Jones & Ramon Marimon, 1997. "The economics of split-ticket voting in representative democracies," Working Papers 582, Federal Reserve Bank of Minneapolis.
  11. Beck, Thorsten & Clarke, George & Groff, Alberto & Keefer, Philip & Walsh, Patrick, 2000. "New tools and new tests in comparative political economy - the database of political institutions," Policy Research Working Paper Series 2283, The World Bank.
  12. Gian Maria Milesi-Ferretti & Roberto Perotti & Massimo Rostagno, 2002. "Electoral Systems And Public Spending," The Quarterly Journal of Economics, MIT Press, vol. 117(2), pages 609-657, May.
  13. Traistaru, Iulia & Volpe Martincus, Christian, 2003. "Economic integration and manufacturing concentration patterns: Evidence from Mercosur," ZEI Working Papers B 23-2003, ZEI - Center for European Integration Studies, University of Bonn.
  14. Pushan Dutt & Devashish Mitra, 2002. "Political Ideology and Endogenous Trade Policy: An Empirical Investigation," NBER Working Papers 9239, National Bureau of Economic Research, Inc.
  15. Persson, Torsten & Roland, Gerard & Tabellini, Guido, 1997. "Separation of Powers and Political Accountability," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1163-1202, November.
  16. Torsten Persson & Guido Tabellini, 2005. "The Economic Effects of Constitutions," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262661926, December.
  17. Beck, T.H.L. & Clarke, G. & Groff, A. & Keefer , P. & Walsh, P., 2001. "New tools in comparative political economy: The database of political institutions," Open Access publications from Tilburg University urn:nbn:nl:ui:12-3125517, Tilburg University.
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Citations

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Cited by:
  1. Balding, Christopher, 2011. "A Re-examination of the Relation between Democracy and International Trade The Case of Africa," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  2. Olper, Alessandro & Raimondi, Valentina, 2008. "Consitutional Rules and Agricultural Policy Outcomes," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 43870, European Association of Agricultural Economists.
  3. Anderson, Kym & Rausser, Gordon & Swinnen, Johan, 2012. "Political Economy of Public Policies: Insights from Distortions to Agricultural and Food Markets," CEPR Discussion Papers 9221, C.E.P.R. Discussion Papers.
  4. Mirabelle Muûls & Dimitra Petropoulou, 2013. "A swing state theory of trade protection in the Electoral College," Canadian Journal of Economics, Canadian Economics Association, vol. 46(2), pages 705-724, May.

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