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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, 2010. "Unilateral Tariff Liberalisation," NBER Working Papers 16600, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:16600
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    Cited by:

    1. 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.
    2. 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).
    3. 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(01), pages 87-99, January.
    4. Hoekman, Bernard, 2011. "Changing Developing Country Trade Policies and WTO Engagement," CEPR Discussion Papers 8210, C.E.P.R. Discussion Papers.
    5. Maria Bas & Pamela Bombarda, 2013. "Chinese Trade Reforms, Market Access and Foreign Competition: The Patterns of French Exporters," World Bank Economic Review, World Bank Group, vol. 27(1), pages 80-108.
    6. Navas, Antonio, 2015. "Trade liberalisation and innovation under sector heterogeneity," Regional Science and Urban Economics, Elsevier, vol. 50(C), pages 42-62.
    7. Richard Baldwin, 2014. "WTO 2.0: governance of global supply-chain trade," Chapters,in: A World Trade Organization for the 21st Century, chapter 2, pages 12-47 Edward Elgar Publishing.
    8. Ito, Tadashi, 2015. "On the variety of Mexico's export goods," IDE Discussion Papers 510, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    9. 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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    JEL classification:

    • F1 - International Economics - - Trade
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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