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Unilateral tariff liberalisation

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  • Richard Baldwin

Abstract

Unilateral tariff liberalisation by developing nations is pervasive but our understanding of it is shallow. This paper strives to partly redress this lacuna on the theory side by introducing three novel political economy mechanisms with particular emphasis is on the role of production unbundling. One mechanism studies how lowering frictional barriers to imported parts can destroy the correlation of interests between parts producers and their downstream customers. A second mechanism studies how Kojima’s pro-trade FDI raises the political economy cost of maintaining high upstream barriers. The third works via a general equilibrium channel whereby developing country’s participation in the supply chains of advanced-nation industries undermines their own competitiveness in final goods, thus making final good protection more politically costly. In essence, developing nations’ pursuit of the export-processing industrialisation undermines their infant-industry industrialisation strategies.

Suggested Citation

  • Richard Baldwin, 2011. "Unilateral tariff liberalisation," Global COE Hi-Stat Discussion Paper Series gd10-159, Institute of Economic Research, Hitotsubashi University.
    • Handle: RePEc:hst:ghsdps:gd10-159
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    Cited by:

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    2. Tomiura, Eiichi & Ito, Banri & Mukunoki, Hiroshi & Wakasugi, Ryuhei, 2021. "Individual characteristics and the demand for reciprocity in trade liberalization: Evidence from a survey in Japan," Japan and the World Economy, Elsevier, vol. 58(C).
    3. Marco Fugazza & Frédéric Robert-Nicoud, 2014. "The “Emulator Effect” of the Uruguay Round on US Regionalism," Review of International Economics, Wiley Blackwell, vol. 22(5), pages 1049-1078, November.
    4. TOMIURA Eiichi & ITO Banri & MUKUNOKI Hiroshi & WAKASUGI Ryuhei, 2014. "Reciprocal Versus Unilateral Trade Liberalization: Comparing individual characteristics of supporters," Discussion papers 14067, Research Institute of Economy, Trade and Industry (RIETI).
    5. Robert Warner & Marlon Anatol, 2015. "Caribbean Integration—Lessons for the Pacific?," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 2(1), pages 183-196, January.
    6. Sebastian Cuadros & Yeny E. Rodríguez & Javier Contreras, 2023. "Determinants of the Efficiency of Electricity Generation in Latin America and Caribbean Countries Using a Cragg’s Regression Model," Energies, MDPI, vol. 16(23), pages 1-18, December.
    7. Pierre-Louis Vézina, 2014. "Race-to-the-bottom Tariff Cutting," Review of International Economics, Wiley Blackwell, vol. 22(3), pages 444-458, August.
    8. Blanchard, Emily J., 2015. "A Shifting Mandate: International Ownership, Global Fragmentation, and a Case for Deeper Integration under the WTO," World Trade Review, Cambridge University Press, vol. 14(1), pages 87-99, January.
    9. Hoekman, Bernard, 2011. "Changing Developing Country Trade Policies and WTO Engagement," CEPR Discussion Papers 8210, C.E.P.R. Discussion Papers.
    10. Tristan Kohl, 2014. "Do we really know that trade agreements increase trade?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 150(3), pages 443-469, August.
    11. Maria Bas & Pamela Bombarda, 2011. "Unilateral trade reform, Market Access and Foreign Competition: the Patterns of Multi-Product Exporters," Working Papers 2011-18, CEPII research center.
    12. Maria Bas & Pamela Bombarda, 2013. "Chinese Trade Reforms, Market Access and Foreign Competition: The Patterns of French Exporters," The World Bank Economic Review, World Bank, vol. 27(1), pages 80-108.
    13. Navas, Antonio, 2015. "Trade liberalisation and innovation under sector heterogeneity," Regional Science and Urban Economics, Elsevier, vol. 50(C), pages 42-62.
    14. Peter Drahos & Christian Downie, 2017. "Regulatory Unilateralism: Arguments for Going It Alone on Climate Change," Global Policy, London School of Economics and Political Science, vol. 8(1), pages 32-40, February.
    15. Baldwin, Richard, 2012. "Global supply chains: Why they emerged, why they matter, and where they are going," CEPR Discussion Papers 9103, C.E.P.R. Discussion Papers.
    16. Choong, Pai Wei & khalifah, noor & Mohd Nor, Abu Hassan Shaari & Ismail, Mohd Adib, 2018. "Free Trade Agreements and Production Sharing in Malaysian Manufacturing Industries," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 52(3), pages 91-106.
    17. Richard Baldwin, 2014. "WTO 2.0: governance of global supply-chain trade," Chapters, in: Richard Baldwin & Masahiro Kawai & Ganeshan Wignaraja (ed.), A World Trade Organization for the 21st Century, chapter 2, pages 12-47, Edward Elgar Publishing.
    18. Ito, Tadashi, 2015. "On the variety of Mexico's export goods," IDE Discussion Papers 510, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    19. Blanchard, Emily J., 2014. "What global fragmentation means for the WTO: Article XXIV, behind-the-border concessions, and a new case for WTO limits on investment incentives," WTO Staff Working Papers ERSD-2014-03, World Trade Organization (WTO), Economic Research and Statistics Division.

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    More about this item

    Keywords

    unilateral tariff liberalisation; race-to-the-bottom; political economy;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration

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