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Political Economy of Trade Liberalization: The case of postwar Japan

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  • NAOI Megumi
  • OKAZAKI Tetsuji

Abstract

How did the postwar newer democracies, whose governments faced pressure from both vested special interests and voters, achieve trade liberalization? Exploiting the case of trade liberalization in Japan in the 1960s, this paper addresses this question. Because the benefits and costs of trade liberalization are unequally distributed among the population, generating winners and losers, trade liberalization is inherently a highly political issue. The Japanese government and the Liberal Democratic Party (LDP) leaders used two tactics to build a coalition of legislators for trade liberalization. While they used sequencing of liberalization to buy off support from the legislators of the Upper House, they relied on side payments for the legislators of the Lower House. This strategy choice was consistent with the difference in the sizes of the electoral districts between the Upper House and the Lower House.

Suggested Citation

  • NAOI Megumi & OKAZAKI Tetsuji, 2013. "Political Economy of Trade Liberalization: The case of postwar Japan," Discussion papers 13090, Research Institute of Economy, Trade and Industry (RIETI).
    • Handle: RePEc:eti:dpaper:13090
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    File URL: https://www.rieti.go.jp/jp/publications/dp/13e090.pdf
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    References listed on IDEAS

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    1. Harrison, Ann (ed.), 2007. "Globalization and Poverty," National Bureau of Economic Research Books, University of Chicago Press, number 9780226318004, December.
    2. Petia Topalova, 2007. "Trade Liberalization, Poverty and Inequality: Evidence from Indian Districts," NBER Chapters, in: Globalization and Poverty, pages 291-336, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Kiyota, Kozo & Okazaki, Tetsuji, 2016. "Assessing the effects of Japanese industrial policy change during the 1960s," Journal of the Japanese and International Economies, Elsevier, vol. 40(C), pages 31-42.

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