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Trade effects of industrial policies: Are preferential agreements a shield?

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  • Barattieri, Alessandro
  • Mattoo, Aaditya
  • Taglioni, Daria

Abstract

This paper explores the trade effects of industrial policy (IP), focusing on the role of preferential trade agreements (PTAs). The analysis uses data on product-level bilateral trade, industrial policy announcements, and rules on subsidies in different PTAs. The introduction of a new IP measure in a destination market reduces export growth to that market by about 0.28 percent. However, exports from fellow members of PTAs are not adversely affected and may be positively affected if the agreements have deep disciplines on subsidies. These findings suggest that PTAs have a shielding effect against the trade distorting effects of industrial policies.

Suggested Citation

  • Barattieri, Alessandro & Mattoo, Aaditya & Taglioni, Daria, 2025. "Trade effects of industrial policies: Are preferential agreements a shield?," Journal of Policy Modeling, Elsevier, vol. 47(4), pages 830-841.
    • Handle: RePEc:eee:jpolmo:v:47:y:2025:i:4:p:830-841
    DOI: 10.1016/j.jpolmod.2025.06.015
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    Keywords

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    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods

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