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The effects of endogenous protection on the economic landscape

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  • Gáname, María Cecilia
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    Abstract

    The author studies the impact of political economy variables on the spatial distribution of industry. The political game between a single lobby and a partial opportunistic incumbent may alter the economic landscape of a small economy. The trade policy endogenously determined becomes the channel to understand how the players’ behaviour impacts on the long run spatial distribution of industry. When the rest of the world is a free trader and the spending share of an economy is relatively small, the marginal change in the trade policy has a relevant impact on the industry share. Amazingly, if a small economy is characterised by a government that is not very much concerned about general welfare and there is a lobby of few capital owners that play actively, the possible outcome will be a relocation of industry that favours such an economy. Capital owners might make capital flow to look for protection. Political variables may act as a dispersion force.

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    File URL: https://www.uantwerpen.be/images/uantwerpen/container2143/files/Publications/WP/2005/01-Ganame.pdf
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    Paper provided by Universiteit Antwerpen, Institute of Development Policy and Management (IOB) in its series IOB Working Papers with number 2005.01.

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    Length: 32 pages
    Date of creation: 2005
    Handle: RePEc:iob:wpaper:2005001
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    1. Ottaviano, Gianmarco & Thisse, Jacques-Francois, 2004. "Agglomeration and economic geography," Handbook of Regional and Urban Economics,in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 58, pages 2563-2608 Elsevier.
    2. Ottaviano, Gianmarco I. P. & Thisse, Jacques-Francois, 2002. "Integration, agglomeration and the political economics of factor mobility," Journal of Public Economics, Elsevier, vol. 83(3), pages 429-456, March.
    3. Behrens, Kristian & Gaigné, Carl & Ottaviano, Gianmarco & Thisse, Jacques-François, 2003. "Inter-regional and International Trade: Seventy Years After Ohlin," CEPR Discussion Papers 4065, C.E.P.R. Discussion Papers.
    4. Baldwin, Richard E & Martin, Philippe & Ottaviano, Gianmarco I P, 2001. "Global Income Divergence, Trade, and Industrialization: The Geography of Growth Take-Offs," Journal of Economic Growth, Springer, vol. 6(1), pages 5-37, March.
    5. Richard E. Baldwin & Frédéric Robert-Nicoud, 2007. "Entry and Asymmetric Lobbying: Why Governments Pick Losers," Journal of the European Economic Association, MIT Press, vol. 5(5), pages 1064-1093, 09.
    6. kishore gawande & pravin krishna, 2005. "The Political Economy of Trade Policy: Empirical Approaches," International Trade 0503003, EconWPA.
    7. Baldwin, Richard E., 1999. "Agglomeration and endogenous capital," European Economic Review, Elsevier, vol. 43(2), pages 253-280, February.
    8. Ottaviano, Gianmarco I. P., 2001. "Monopolistic competition, trade, and endogenous spatial fluctuations," Regional Science and Urban Economics, Elsevier, vol. 31(1), pages 51-77, February.
    9. Martin, Philippe & Rogers, Carol Ann, 1995. "Industrial location and public infrastructure," Journal of International Economics, Elsevier, vol. 39(3-4), pages 335-351, November.
    10. Devashish Mitra & Dimitrios D. Thomakos & Mehmet A. Ulubaşoglu, 2002. ""Protection For Sale" In A Developing Country: Democracy Vs. Dictatorship," The Review of Economics and Statistics, MIT Press, vol. 84(3), pages 497-508, August.
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