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Political economy determinants of non-agricultural trade policy

Author

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  • Subhayu Bandyopadhyay
  • Suryadipta Roy

Abstract

The authors investigate several existing political economy hypotheses on trade policy using cross-country trade-protection data for non-agricultural goods. The authors find that a left-leaning political regime leads to pro-labor trade policies only for a subset of trade policy measures. In addition, they find that income inequality and country-level corruption appear to be important determinants of trade policy. For various measures of trade protection, it appears that corruption tends to hurt labor interests by increasing trade protection in labor-abundant countries and reducing trade protection in capital-abundant countries. This finding suggests that corruption, among other factors, may move trade policy away from the desires of the median voter.

Suggested Citation

  • Subhayu Bandyopadhyay & Suryadipta Roy, 2011. "Political economy determinants of non-agricultural trade policy," Review, Federal Reserve Bank of St. Louis, vol. 93(Mar), pages 89-104.
    • Handle: RePEc:fip:fedlrv:y:2011:i:mar:p:89-104:n:v.93no.2
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    References listed on IDEAS

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    4. Sondra Collins & Edward Nissan, 2016. "Comparing Africa, Asia and Latin America/Caribbean countries using per capita GDP, remittances, openness, capital/labor ratios and freedom," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 40(1), pages 188-198, January.

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