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What does the Political Economy Literature on Trade Policy (Not) Tell Us That We Ought to Know?

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  • Rodrik, Dani

Abstract

Three questions lie at the core of the large and distinguished literature on the political economy of trade policy. First, why is international trade not free? Second, why are trade policies universally biased against (rather than in favour of) trade? Third, what are the determinants of the variation in protection levels across industries, countries, and institutional contexts? These questions are handled only imperfectly by the existing literature. Current models treat trade policy as a redistributive tool, but do not explain why it emerges in political equilibrium in preference over more direct policy instruments. Further, existing models do not generate a bias against trade, implying that pro-trade interventions are as likely as trade-restricting interventions. The greatest contribution of the political economy literature may lie in developing a better grasp of normative economic analysis - that is, in helping design policies, rules, and institutions.

Suggested Citation

  • Rodrik, Dani, 1994. "What does the Political Economy Literature on Trade Policy (Not) Tell Us That We Ought to Know?," CEPR Discussion Papers 1039, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:1039
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    Cited by:

    1. Laixun Zhao, 1996. "The Complementarity Between Endogenous Protection And Direct Foreign Investment," Economics and Politics, Wiley Blackwell, vol. 8(1), pages 61-72, March.
    2. Rauscher, Michael, 1995. "Protectionists, environmentalists, and the formation of environmental policy in an open economy," Discussion Papers, Series II 256, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
    3. Henisz, Witold J. & Zelner, Bennet A., 2006. "Interest Groups, Veto Points, and Electricity Infrastructure Deployment," International Organization, Cambridge University Press, vol. 60(1), pages 263-286, January.
    4. Figueroa, Enrique E., 1996. "The Competitiveness of Mexican and Caribbean Basin Horticultural Products in the U.S. Market," Staff Papers 121181, Cornell University, Department of Applied Economics and Management.
    5. Giovanni Facchini, 2004. "The political economy of international trade and factor mobility," Journal of Economic Surveys, Wiley Blackwell, vol. 18(1), pages 1-32, February.
    6. Sturzenegger, Federico, 1995. "Endogenous learning and trade policy," Economics Letters, Elsevier, vol. 49(4), pages 429-433, October.
    7. Kyle Bagwell & Robert W. Staiger, 1996. "Reciprocal Trade Liberalization," Discussion Papers 1150, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    8. Pravin Krishna & Devashish Mitra, 2003. "Reciprocated Unilateralism in Trade Policy: An Interest-Group Approach," NBER Working Papers 9631, National Bureau of Economic Research, Inc.
    9. Scott Bradford, 2000. "Rents, Votes, and Protection: Explaining the Structure of Trade Barriers Across Industries," Econometric Society World Congress 2000 Contributed Papers 1717, Econometric Society.
    10. Karp, Larry S., 1995. "The Direction and Timing of Agricultural Trade Reform in Central and East Europe," CUDARE Working Papers 6297, University of California, Berkeley, Department of Agricultural and Resource Economics.
    11. Rauscher, Michael, 2001. "International trade, foreign investment, and the environment," Thuenen-Series of Applied Economic Theory 29, University of Rostock, Institute of Economics.
    12. Anne O. Krueger, 1996. "Introduction to "The Political Economy of American Trade Policy"," NBER Chapters, in: The Political Economy of American Trade Policy, pages 1-10, National Bureau of Economic Research, Inc.
    13. Ramkishen Rajan, 1996. "Measures of intra-industry trade reconsidered with reference to Singapore’s bilateral trade with Japan and the United States," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 132(2), pages 378-389, September.
    14. Marcel Vaillant, 1998. "Endogenous number of lobby groups in a specific factor trade model," Documentos de Trabajo (working papers) 0198, Department of Economics - dECON.
    15. Jonathan Brooks, 1996. "Agricultural Policies In Oecd Countries: What Can We Learn From Political Economy Models?," Journal of Agricultural Economics, Wiley Blackwell, vol. 47(1‐4), pages 366-389, January.
    16. Bernardes, Luis G., 2003. "Reference-dependent preferences and the speed of economic liberalization," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 32(5), pages 521-548, November.
    17. Levy, Philip I., 1999. "Lobbying and international cooperation in tariff setting," Journal of International Economics, Elsevier, vol. 47(2), pages 345-370, April.
    18. Rauscher, Michael, 1995. "Protectionists, environmentalists, and the formation of environmental policy in an open economy," Kiel Working Papers 685, Kiel Institute for the World Economy (IfW Kiel).
    19. Gil S. Epstein & Shmuel Nitzan, 2003. "Political culture and monopoly price determination," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 21(1), pages 1-19, August.
    20. Piazolo, Daniel, 1995. "The impact of regionalism on the multilateral trading order: French tariff bargaining in the Uruguay Round," Kiel Working Papers 705, Kiel Institute for the World Economy (IfW Kiel).
    21. Rahim, Sikander, 2018. "Capital, technical progress and international trade," MPRA Paper 94432, University Library of Munich, Germany.

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    Keywords

    Political Economy; Trade Policy;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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