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Trade, Factor Proportions, and Political Rights

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  • José Tavares

    (Faculdade de Economia, Universidade Nova de Lisboa)

Abstract

This paper uses aggregate data to test the implication that capitalpoor individuals favor trade liberalization in poor (capital-scarce) countries and are against it in rich (labor-scarce) countries. Income per capita is used as a proxy for the country capital-labor ratio while political rights is used as a proxy for the capital-labor ratio of the median voter. We analyze the determinants of average tariff rates in a cross section of countries to find that they are negatively associated with both income per capita and political rights, while they are positively, significantly, and robustly associated with their interaction, corroborating our initial hypothesis. Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Suggested Citation

  • José Tavares, 2008. "Trade, Factor Proportions, and Political Rights," The Review of Economics and Statistics, MIT Press, vol. 90(1), pages 163-168, February.
  • Handle: RePEc:tpr:restat:v:90:y:2008:i:1:p:163-168
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    References listed on IDEAS

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    1. Tavares, Jose & Wacziarg, Romain, 2001. "How democracy affects growth," European Economic Review, Elsevier, vol. 45(8), pages 1341-1378, August.
    2. Mussa, Michael, 1974. "Tariffs and the Distribution of Income: The Importance of Factor Specificity, Substitutability, and Intensity in the Short and Long Run," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1191-1203, Nov.-Dec..
    3. Mayda, Anna Maria & Rodrik, Dani, 2005. "Why are some people (and countries) more protectionist than others?," European Economic Review, Elsevier, vol. 49(6), pages 1393-1430, August.
    4. Kenneth F. Scheve & Matthew J. Slaughter, 1998. "What Determines Individual Trade Policy Preferences?," NBER Working Papers 6531, National Bureau of Economic Research, Inc.
    5. 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.
    6. Jong-Wha Lee & Phillip Swagel, 2000. "Trade Barriers And Trade Flows Across Countries And Industries," The Review of Economics and Statistics, MIT Press, vol. 79(3), pages 372-382, August.
    7. Edward J. Balistreri, 1997. "The Performance of the Heckscher-Ohlin-Vanek Model in Predicting Endogenous Policy Forces at the Individual Level," Canadian Journal of Economics, Canadian Economics Association, vol. 30(1), pages 1-17, February.
    8. Donald R. Davis, 1996. "Trade Liberalization and Income Distribution," Harvard Institute of Economic Research Working Papers 1769, Harvard - Institute of Economic Research.
    9. Francisco Rodriguez & Dani Rodrik, 1999. "Trade Policy and Economic Growth: A Skeptic's Guide to Cross-National Evidence," NBER Working Papers 7081, National Bureau of Economic Research, Inc.
    10. Alberto Alesina & Romain Wacziarg, 1997. "Openness, Country Size and the Government," NBER Working Papers 6024, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Cervellati, Matteo & Naghavi, Alireza & Toubal, Farid, 2013. "Trade Liberalization, Democratization and Technology Adoption," IZA Discussion Papers 7132, Institute for the Study of Labor (IZA).
    2. Roy, Martin, 2010. "Endowments, power, and democracy: Political economy of multilateral commitments on trade in services," WTO Staff Working Papers ERSD-2010-11, World Trade Organization (WTO), Economic Research and Statistics Division.

    More about this item

    JEL classification:

    • F0 - International Economics - - General
    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F1 - International Economics - - Trade
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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