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Taking Trade Policy Seriously: Export Subsidization as a Case Study in Policy Effectiveness

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  • Rodrik, Dani

Abstract

In thinking about policy, academic economists alternate between theoretical models in which governments can design finely-tuned optimal interventions and practical considerations which usually assume the government to be incompetent and hostage to special interests. I argue in this paper that neither of these caricatures is accurate, and that there is much to be learned by undertaking systematic, analytical studies of state capabilities how they are generated and why they differ across countries and issue areas. Case studies of export subsidization in Bolivia, Brazil, India, Kenya, Korea, and Turkey are presented to confront usual presumptions against actual experience. Contrary to conventional wisdom, the successful cases (Korea and Brazil) turn out to be ones in which the government exercised discretion and selectivity, while the most uniform and non-discretionary cases (Kenya and Bolivia) were clear failures. The paradox is explained in terms of state autonomy and policy coherence.

Suggested Citation

  • Rodrik, Dani, 1994. "Taking Trade Policy Seriously: Export Subsidization as a Case Study in Policy Effectiveness," CEPR Discussion Papers 900, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:900
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Mody, Ashoka, 1999. "Industrial policy after the East Asian crisis - from"outward orientation"to new internal capabilities?," Policy Research Working Paper Series 2112, The World Bank.
    2. Hoekman, Bernard M. & Maskus, Keith E. & Saggi, Kamal, 2005. "Transfer of technology to developing countries: Unilateral and multilateral policy options," World Development, Elsevier, vol. 33(10), pages 1587-1602, October.
    3. Staiger, Robert W., 1995. "International rules and institutions for trade policy," Handbook of International Economics,in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 29, pages 1495-1551 Elsevier.
    4. Brander, James A., 1995. "Strategic trade policy," Handbook of International Economics,in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 27, pages 1395-1455 Elsevier.
    5. Keuschnigg, Christian & Kohler, Wilhelm, 1996. "Commercial policy and dynamic adjustment under monopolistic competition," Journal of International Economics, Elsevier, vol. 40(3-4), pages 373-409, May.
    6. Alexandr Knobel, 2010. "Factors of important Tariff Information," Research Paper Series, Gaidar Institute for Economic Policy, issue 143P.
    7. Rodrik, Dani, 2005. "Growth Strategies," Handbook of Economic Growth,in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 14, pages 967-1014 Elsevier.
    8. Bernard Hoekman, 2004. "Policies Facilitating Firm Adjustment to Globalization," Oxford Review of Economic Policy, Oxford University Press, vol. 20(3), pages 457-473, Autumn.
    9. Gabriel Porcile & Gilberto Tadeu Lima, 2010. "Real exchange rate and elasticity of labour supply in a balance-of-payments-constrained macrodynamics," Cambridge Journal of Economics, Oxford University Press, vol. 34(6), pages 1019-1039.
    10. Gunseli Berik, 2006. "Growth with Gender Inequity: Another Look at East Asian Development," Working Paper Series, Department of Economics, University of Utah 2006_03, University of Utah, Department of Economics.
    11. Sacchidananda Mukherjee & Debashis Chakraborty & Julien Chaisse, 2014. "Influence of Subsidies on Exports empirical estimates,policy evidences and regulatory prospects," Working Papers 1422, Indian Institute of Foreign Trade.
    12. Helmers, Christian & Trofimenko, Natalia, 2009. "Export subsidies in a heterogeneous firms framework," Kiel Working Papers 1476, Kiel Institute for the World Economy (IfW).
    13. Richard G. Lipsey, 2013. "Some contentious issues in theory and policy in memory of Mark Blaug," Chapters,in: Mark Blaug: Rebel with Many Causes, chapter 6, pages 31-62 Edward Elgar Publishing.
    14. Judith Streak, 1997. "The counter-counterrevolution in development theory on the role of the state in development: Inferences for South Africa?," Development Southern Africa, Taylor & Francis Journals, vol. 14(3), pages 307-325.

    More about this item

    Keywords

    Export Subsidies; State Autonomy; Trade Policy;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General

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