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Lobbying and Agricultural Trade Policy in the United States

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  • Gawande, Kishore
  • Hoekman, Bernard

Abstract

This paper studies whether political campaign contributions influence agricultural protection in the United States in the manner suggested by the political economy model of Grossman and Helpman (1994), using a detailed cross-sectional data set of agricultural protection, subsidies, and contributions to Political Action Committees in the late 1990s. The data do not reject the qualitative predictions of the model: that policymakers will consider both the wishes of specific lobbies and the interests of society as a whole in their decisions. However, the estimated weight of lobbying contributions in decision-making (actual policy) is found to be very low. This is a puzzle as it seems to suggest irrational behavior on the part of the lobbies that make political contributions. It is also inconsistent with the large estimates of deadweight losses from distortionary policy in agriculture. We show that the puzzle can be resolved by extending the model to allow uncertainty about the ability of politicians to deliver policy combined with the fact that contributions are made before policy is decided. The results of the analysis illustrate that the underpinnings of the prevailing political economy equilibrium that supports restrictive agricultural trade policies will be difficult to dislodge in the absence of mobilizing strong counter-lobbying to induce a more liberal policy stance. This of course is one rationale for international trade negotiations - but it requires that other groups in society see enough of an incentive to engage in the political process, pointing to the importance of the design of the negotiating agenda.

Suggested Citation

  • Gawande, Kishore & Hoekman, Bernard, 2006. "Lobbying and Agricultural Trade Policy in the United States," CEPR Discussion Papers 5634, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:5634
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    Cited by:

    1. John Gilbert & Reza Oladi, 2012. "Net campaign contributions, agricultural interests, and votes on liberalizing trade with China," Public Choice, Springer, vol. 150(3), pages 745-769, March.
    2. Jianxing Lyu & Sören Prehn & Yanjie Zhang & Thomas Glauben & Yinchu Zeng, 2021. "Trade creation, political sensitivity and product exclusions: the political economy of agriculture protection in China’s FTAs," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 65(3), pages 627-657, July.
    3. Bellemare, Marc F. & Carnes, Nicholas, 2015. "Why do members of congress support agricultural protection?," Food Policy, Elsevier, vol. 50(C), pages 20-34.
    4. Kristy Buzard, 2017. "Trade Agreements in the Shadow of Lobbying," Review of International Economics, Wiley Blackwell, vol. 25(1), pages 21-43, February.
    5. Kym Anderson & Gordon Rausser & Johan Swinnen, 2013. "Political Economy of Public Policies: Insights from Distortions to Agricultural and Food Markets," Journal of Economic Literature, American Economic Association, vol. 51(2), pages 423-477, June.
    6. Dutt, Pushan & Mitra, Devashish, 2009. "Explaining Agricultural Distortion Patterns : The Roles of Ideology, Inequality, Lobbying and Public Finance," Agricultural Distortions Working Paper Series 50299, World Bank.
    7. Craig VanGrasstek VanGrasstek, 2017. "Washington Slept Here: How Donald Trump Caught the Politicians Napping on Trade," RSCAS Working Papers 2017/02, European University Institute.
    8. Clas Eriksson, 2011. "Home bias in preferences and the political economics of agricultural protection," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement, INRA Department of Economics, vol. 92(1), pages 5-23.
    9. Tyutin, Anton & Zaporozhets, Vera, 2017. "On Legislative Lobbying under Political Uncertainty," TSE Working Papers 17-807, Toulouse School of Economics (TSE).
    10. Olper, Alessandro, 2017. "The political economy of trade-related regulatory policy: environment and global value chain," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 5(3), February.
    11. Ingo Rohlfing & Tobias Schafföner, 2019. "The time-varying relationship between economic globalization and the ideological center of gravity of party systems," PLOS ONE, Public Library of Science, vol. 14(2), pages 1-26, February.
    12. Eriksson, Clas, 2011. "Home bias in preferences and the political economics of agricultural protection," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement (RAEStud), Institut National de la Recherche Agronomique (INRA), vol. 92(1).
    13. Zahrnt, Valentin, 2008. "Domestic constituents and the formulation of WTO negotiating positions: what the delegates say," World Trade Review, Cambridge University Press, vol. 7(2), pages 393-421, April.
    14. Moon, Wanki & Sakuyama, Takumi, 2021. "The Political Economy of Agricultural Trade Policy in Northeast Asia: Comparisons with the West and between Japan and Korea," 2021 Conference, August 17-31, 2021, Virtual 315192, International Association of Agricultural Economists.
    15. Kym Anderson, 2016. "Agricultural Trade, Policy Reforms, and Global Food Security," Palgrave Studies in Agricultural Economics and Food Policy, Palgrave Macmillan, number 978-1-137-46925-0.
    16. Doron Nisani, 2018. "Efficient indirect regulation under Protection for Sale," Journal of Regulatory Economics, Springer, vol. 54(1), pages 41-52, August.
    17. Wenshou Yan & Kaixing Huang, 2018. "Determinants of agricultural protection in China and the rest of the world," Asian-Pacific Economic Literature, Asia Pacific School of Economics and Government, The Australian National University, vol. 32(2), pages 64-75, November.
    18. Lopez, Rigoberto A. & He, Xi & De Falcis, Eleonora, 2017. "What Drives China’s New Agricultural Subsidies?," World Development, Elsevier, vol. 93(C), pages 279-292.

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    More about this item

    Keywords

    agriculture; lobbying; political economy of protection;
    All these keywords.

    JEL classification:

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

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