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Socially Responsible Trade Integration: A Political Economy Perspective

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  • Verdier, Thierry

Abstract

Economists tend to agree that international trade liberalization brings significant gains from trade to countries engaging in such a process. At the same time however, public opinion is much less optimistic and there is a widespread concern that the current sharing of the gains from trade is ?unfair? and unevenly distributed across and within countries. This Paper emphasizes that in order to understand the position of globalization skeptics and respond adequately to their complaints, one should move beyond the existence of the gains from trade (static and/or dynamic) and one should pay more attention to the ?pains from trade? and, more generally, the distributive dimensions of trade integration. In particular, a critical dimension that needs to be addressed is the issue of the redistribution (or non-redistribution) of the gains from trade and the interactions between trade openness and domestic redistributive policy. After reviewing briefly what we know about the distributive impacts of trade openness, the paper considers the political economy feedbacks of trade integration on domestic redistribution and identifies the economic and political feasibility constraints of a ?trade regime with redistribution?. Taking then a normative perspective, it explores the conditions for the existence of a ?socially responsible? open trade regime and discusses some of the policy tradeoffs associated with its implementation.

Suggested Citation

  • Verdier, Thierry, 2004. "Socially Responsible Trade Integration: A Political Economy Perspective," CEPR Discussion Papers 4699, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:4699
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    Citations

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    Cited by:

    1. Do, Quy-Toan & Levchenko, Andrei A., 2009. "Trade, inequality, and the political economy of institutions," Journal of Economic Theory, Elsevier, vol. 144(4), pages 1489-1520, July.
    2. Louis Hotte & Stanley L. Winer, 2008. "The Demands for Environmental Regulation and for Trade in the Presence of Private Mitigation," Working Papers 0810E, University of Ottawa, Department of Economics.
    3. Hotte, Louis & Winer, Stanley L., 2012. "Environmental regulation and trade openness in the presence of private mitigation," Journal of Development Economics, Elsevier, vol. 97(1), pages 46-57.
    4. Ruben Segura-Cayuela, 2006. "Inefficient Policies, Inefficient Institutions and Trade," 2006 Meeting Papers 502, Society for Economic Dynamics.
    5. Emmanuel MOUSSONE, 2010. "Insertion des pays de la zone franc africaine dans le commerce mondial : étude d’une spécialisation appauvrissante et le problème du financement de l’économie (Insertion of the African Franc Zone Coun," Working Papers 231, Laboratoire de Recherche sur l'Industrie et l'Innovation. ULCO / Research Unit on Industry and Innovation.

    More about this item

    JEL classification:

    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • F10 - International Economics - - Trade - - - General
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

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