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A Protectionist Bias In Majoritarian Politics: An Empirical Investigation

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Do politics affect trade policy? Despite an extensive literature examining the relationship between trade policy and some political factors, relatively few studies have explored the role of a country's electoral system, arguably one of the most fundamental characteristics of a nation's political landscape. This paper examines the empirical relationship between tariffs and electoral systems across countries and over time. The broad theoretical framework is provided by Grossman and Helpman, which predicts a bias towards a non-zero average tariff, i.e. a "protectionist bias", in countries with majoritarian systems, since politicians in a majoritarian system aim to maximize the welfare of their home districts, as opposed to the welfare of the nation as a whole. I compare average tariffs of countries with majoritarian systems to those with proportional systems, using methods that address the omitted variables/sample selection problem inherent to this analysis. I find that countries with majoritarian systems do indeed appear to have higher average tariffs than do countries with proportional systems. This result holds after controlling for other country-specific characteristics, such as a country's legal origins, colonial history, and geographic location. Copyright 2009 Blackwell Publishing Ltd.

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Article provided by Wiley Blackwell in its journal Economics & Politics.

Volume (Year): 21 (2009)
Issue (Month): 2 (07)
Pages: 278-307

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Handle: RePEc:bla:ecopol:v:21:y:2009:i:2:p:278-307
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