IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/900.html
   My bibliography  Save this paper

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

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=900
    Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Rodrik, Dani, 1991. "Policy uncertainty and private investment in developing countries," Journal of Development Economics, Elsevier, vol. 36(2), pages 229-242, October.
    2. Bela Balassa, 1978. "Export incentives and export performance in developing countries: A comparative analysis," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 114(1), pages 24-61, March.
    3. Robert S. Pindyck & Andrés Solimano, 1993. "Economic Instability and Aggregate Investment," NBER Chapters, in: NBER Macroeconomics Annual 1993, Volume 8, pages 259-318, National Bureau of Economic Research, Inc.
    4. Charles R. Frank Jr. & Kwang Suk Kim & Larry E. Westphal, 1975. "Foreign Trade Regimes and Economic Development: South Korea," NBER Books, National Bureau of Economic Research, Inc, number fran75-1, March.
    5. Arslan, Ismail & van Wijnbergen, Sweder, 1990. "Turkey : export miracle or accounting trick?," Policy Research Working Paper Series 370, The World Bank.
    6. Grossman, Gene M & Helpman, Elhanan, 1994. "Protection for Sale," American Economic Review, American Economic Association, vol. 84(4), pages 833-850, September.
    7. Jonathan Eaton & Gene M. Grossman, 1986. "Optimal Trade and Industrial Policy Under Oligopoly," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 101(2), pages 383-406.
    8. Thomas, Vinod & Nash, John, 1991. "Reform of Trade Policy: Recent Evidence from Theory and Practice," The World Bank Research Observer, World Bank, vol. 6(2), pages 219-240, July.
    9. Dixit, Avinash K, 1989. "Entry and Exit Decisions under Uncertainty," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 620-638, June.
    10. Carmichael, Calum M., 1987. "The control of export credit subsidies and its welfare consequences," Journal of International Economics, Elsevier, vol. 23(1-2), pages 1-19, August.
    11. Krugman, Paul R, 1993. "The Narrow and Broad Arguments for Free Trade," American Economic Review, American Economic Association, vol. 83(2), pages 362-366, May.
    12. Andrei Shleifer & Robert Vishny, 1992. "Pervasive Shortages under Socialism," RAND Journal of Economics, The RAND Corporation, vol. 23(2), pages 237-246, Summer.
    13. Levy, Brian, 1993. "An Institutional Analysis of the Design and Sequence of Trade and Investment Policy Reform," The World Bank Economic Review, World Bank, vol. 7(2), pages 247-262, May.
    14. Krueger, Anne O, 1974. "The Political Economy of the Rent-Seeking Society," American Economic Review, American Economic Association, vol. 64(3), pages 291-303, June.
    15. Avinash Dixit, 1989. "Trade and Insurance with Adverse Selection," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 56(2), pages 235-247.
    16. Low, Patrick, 1982. "Export subsidies and trade policy: The experience of Kenya," World Development, Elsevier, vol. 10(4), pages 293-304, April.
    17. Charles R. Frank Jr. & Kwang Suk Kim & Larry E. Westphal, 1975. "Appendices to "Foreign Trade Regimes and Economic Development: South Korea"," NBER Chapters, in: Foreign Trade Regimes and Economic Development: South Korea, pages 245-257, National Bureau of Economic Research, Inc.
    18. Brander, James A. & Spencer, Barbara J., 1985. "Export subsidies and international market share rivalry," Journal of International Economics, Elsevier, vol. 18(1-2), pages 83-100, February.
    19. Rodrik, Dani, 1992. "Political economy and development policy," European Economic Review, Elsevier, vol. 36(2-3), pages 329-336, April.
    20. McCulloch, Rachel, 1993. "The Optimality of Free Trade: Science or Religion?," American Economic Review, American Economic Association, vol. 83(2), pages 367-371, May.
    21. Staiger, Robert W & Tabellini, Guido, 1987. "Discretionary Trade Policy and Excessive Protection," American Economic Review, American Economic Association, vol. 77(5), pages 823-837, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    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. Bernard M. Hoekman & Keith E. Maskus & Kamal Saggi, 2023. "Transfer of Technology to Developing Countries: Unilateral and Multilateral Policy Options," World Scientific Book Chapters, in: Kamal Saggi (ed.), Technology Transfer, Foreign Direct Investment, and the Protection of Intellectual Property in the Global Economy, chapter 5, pages 127-142, World Scientific Publishing Co. Pte. Ltd..
    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 and Oxford Review of Economic Policy Limited, 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, Cambridge Political Economy Society, vol. 34(6), pages 1019-1039.
    10. Mariano Tommasi, 2003. "Crises, institutions politiques et réformes politiques : le bon, le mauvais et l'affreux," Revue d’économie du développement, De Boeck Université, vol. 11(2), pages 49-81.
    11. 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.
    12. 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.
    13. Helmers, Christian & Trofimenko, Natalia, 2009. "Export subsidies in a heterogeneous firms framework," Kiel Working Papers 1476, Kiel Institute for the World Economy (IfW Kiel).
    14. Richard G. Lipsey, 2013. "Some contentious issues in theory and policy in memory of Mark Blaug," Chapters, in: Marcel Boumans & Matthias Klaes (ed.), Mark Blaug: Rebel with Many Causes, chapter 6, pages 31-62, Edward Elgar Publishing.
    15. 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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. Grossman, Gene, 2016. "The Purpose of Trade Agreements," CEPR Discussion Papers 11151, C.E.P.R. Discussion Papers.
    3. D. MacLaren, 1991. "Agricultural Trade Policy Analysis And International Trade Theory: A Review Of Recent Developments," Journal of Agricultural Economics, Wiley Blackwell, vol. 42(3), pages 250-297, September.
    4. Koichi Kagitani, 2008. "The Number Of Firms And The Politics Of Strategic Trade Policy," Scottish Journal of Political Economy, Scottish Economic Society, vol. 55(1), pages 107-122, February.
    5. Dani Rodrik, 1993. "Trade and Industrial Policy Reform in Developing Countries: A Review of Recent Theory and Evidence," NBER Working Papers 4417, National Bureau of Economic Research, Inc.
    6. Bernard Guillochon, 1994. "Coopération et protection : nouveaux enjeux, nouvelles approches," Revue Économique, Programme National Persée, vol. 45(3), pages 475-486.
    7. Park, Chongkook, 1990. "Three essays on strategic trade policy: precommitment, time consistency, and effects of a ratio quota," ISU General Staff Papers 1990010108000010878, Iowa State University, Department of Economics.
    8. Bin, Sheng, 2000. "The Political Economy of Trade Policy in China," Working Papers 10/2000, Copenhagen Business School, Department of Management, Politics & Philosophy.
    9. Dewit, Gerda & Leahy, Dermot, 2004. "Rivalry in uncertain export markets: commitment versus flexibility," Journal of International Economics, Elsevier, vol. 64(1), pages 195-209, October.
    10. Qianqian Shao & Thorsten Janus & Maarten J. Punt & Justus Wesseler, 2018. "The Conservation Effects of Trade with Imperfect Competition and Biased Policymakers," Agriculture, MDPI, vol. 8(7), pages 1-22, July.
    11. Gács, János, 1992. "Az import liberalizálása Dél-Koreában [Import liberation in South Korea]," MPRA Paper 62179, University Library of Munich, Germany.
    12. Krishna, Kala & Roy, Suddhasatwa & Thursby, Marie, 1998. "Implementing Market Access," Review of International Economics, Wiley Blackwell, vol. 6(4), pages 529-544, November.
      • Krishna, K & Roy, S & Thursby, M, 1996. "Implementaing Market Access," Papers 96-003, Purdue University, Krannert School of Management - Center for International Business Education and Research (CIBER).
      • Krishna, K & Thursby, M & Roy, S, 1996. "Implementing Market Access," Papers 96-011, Purdue University, Krannert School of Management - Center for International Business Education and Research (CIBER).
      • Kala Krishna & Suddhasatwa Roy & Marie Thursby, 1996. "Implementing Market Access," NBER Working Papers 5593, National Bureau of Economic Research, Inc.
    13. Rachel Brewster & Claire Brunel & Anna Maria Mayda, 2015. "Trade in Environmental Goods: A Review of the WTO Appellate Body’s Ruling in US — Countervailing Measures (China)," RSCAS Working Papers 2015/69, European University Institute.
    14. Desai, Mihir A. & Hines Jr., James R., 2008. "Market reactions to export subsidies," Journal of International Economics, Elsevier, vol. 74(2), pages 459-474, March.
    15. Yung Yang, 1981. "A Comparative analysis of the determinants of nontraditional exports for Brazil, Israel, and South Korea," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 117(3), pages 497-512, September.
    16. Fujimoto, Hiroaki & Park, Eun-Soo, 1997. "Optimal export subsidy when demand is uncertain," Economics Letters, Elsevier, vol. 55(3), pages 383-390, September.
    17. Neary, J Peter & Leahy, Dermot, 2000. "Strategic Trade and Industrial Policy towards Dynamic Oligopolies," Economic Journal, Royal Economic Society, vol. 110(463), pages 484-508, April.
    18. Hassan Benchekroun & Ngo Long, 2018. "Nurturing an Infant Industry by Markovian Subsidy Schemes," Dynamic Games and Applications, Springer, vol. 8(3), pages 519-541, September.
    19. Corbo, Vittorio & Fischer, Stanley, 1995. "Structural adjustment, stabilization and policy reform: Domestic and international finance," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 44, pages 2845-2924, Elsevier.

    More about this item

    Keywords

    Export Subsidies; State Autonomy; Trade Policy;
    All these keywords.

    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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:900. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://www.cepr.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.