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Are Economists' Traditional Trade Policy Views Still Valid?

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  • Robert E. Baldwin

Abstract

Recent analysis of trade policies under imperfectly competitive market conditions as well as in situations where trade in high-technology products is important have raised doubts whether economists should continue their traditional opposition to trade taxes and subsidies. This paper evaluates the new theoretical arguments for interventionist trade policies by comparing them with the traditional arguments for and against free trade, investigating the empirical evidence supporting the conditions assumed in the new models, appraising the realism of the behavior assumptions of these models and the sensitivity of their conclusions to changes in these assumptions, and considering the political economy implications of these conclusions. The general conclusion is that there are serious practical difficulties with the interventionist arguments of the 'new' trade theorists, as they themselves recognize, just as there are with such traditional arguments for trade intervention as the terms-of-trade case for protection. However, the new industrial organization approach to trade theory has already provided valuable insights into trade behavior in international markets and promises to provide many more as more realistic behavior models are developed.

Suggested Citation

  • Robert E. Baldwin, 1991. "Are Economists' Traditional Trade Policy Views Still Valid?," NBER Working Papers 3793, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:3793
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    Cited by:

    1. Deepak Lal, 1997. "From Planning to Regulation: Towards a New Dirigisme?," UCLA Economics Working Papers 774A, UCLA Department of Economics.
    2. Pierre Jacquet & Patrick Messerlin & Laurence Tubiana, 1999. "Le cycle du millénaire," Sciences Po publications info:hdl:2441/8543, Sciences Po.
    3. Fiamohe, Rose & Diallo, Souleymane & Diagne, Aliou & Agossadou, Arsene, 2015. "Impact of the ECOWAS Common External Tariff on the Rice Sector in West Africa," 2015 Conference, August 9-14, 2015, Milan, Italy 211632, International Association of Agricultural Economists.
    4. Aykut Kibritçioglu, 2002. "On the Smithian origins of "new" trade and growth theories," Economics Bulletin, AccessEcon, vol. 2(1), pages 1-15.
    5. Koester, Ulrich, 1993. "International trade and agricultural development in developing countries: Significance of the Uruguay Round of GATT negotiations," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 8(4), June.
    6. Deepak Lal, 1993. "Trade Blocs and Multilateral Free Trade," Journal of Common Market Studies, Wiley Blackwell, vol. 31(3), pages 349-358, September.
    7. Philippe Barbet & Laurent Benzoni, 1993. "« Mercantilisme technologique » et politique commerciale stratégique : réflexions sur la localisation de l'industrie mondiale des semiconducteurs," Revue Économique, Programme National Persée, vol. 44(4), pages 755-778.
    8. Steve Dowrick, 1994. "Openness and Growth," RBA Annual Conference Volume,in: Philip Lowe & Jacqueline Dwyer (ed.), International Intergration of the Australian Economy Reserve Bank of Australia.
    9. Carter, Colin A. & Wilson, William W., 1997. "Emerging differences in state grain trading: Australia and Canada," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 16(2), May.
    10. Pierre-Yves Hénin & Pierre Ralle, 1993. "Les nouvelles théories de la croissance : quelques apports pour la politique économique," Revue Économique, Programme National Persée, vol. 44(1), pages 75-100.
    11. Marcel Fafchamps, 2007. "Human Capital, Exports, and Wages," Economics Series Working Papers GPRG-WPS-069, University of Oxford, Department of Economics.
    12. Gebhard Kirchgässner, 2015. "Wissenschaftlicher Fortschritt in den Wirtschaftswissenschaften: Einige Bemerkungen," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 135(2), pages 209-248.
    13. repec:ipg:wpaper:2014-550 is not listed on IDEAS
    14. Gács, János & Peck, Merton & Illarionov, Andrei & Havlik, Peter & Kuboniva, Masaaki & Panitch, Vladimir & Sutela, Pekka & Lányi, Kamilla & Bulantsev, Vsevolod & Goldberg, Linda & Tenorio, Rafael & De , 1995. "International Trade Issues of the Russian Federation," MPRA Paper 60426, University Library of Munich, Germany.
    15. Klodt, Henning, 1993. "Theorie der strategischen Handelspolitik und neue Wachstumstheorie als Grundlage für eine Industrie- und Technologiepolitik," Open Access Publications from Kiel Institute for the World Economy 2031, Kiel Institute for the World Economy (IfW).
    16. Ian Parry, 2001. "The Costs of Restrictive Trade Policies in the Presence of Factor Tax Distortions," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 8(2), pages 147-170, March.
    17. William Milberg, 1999. "The Rhetoric of Policy Relevance in International Economics," Macroeconomics 9904009, EconWPA.
    18. Feeney, JoAnne & Hillman, Arye L., 1995. "Asset markets and individual trade policy preferences," Discussion Papers, Series II 282, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
    19. Rob Salmond, 2003. "A New Zealand-US FTA? — A Reality Check," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 10(4), pages 307-323.
    20. Jesús Antón López, 1998. "On the microeconomic ingredients of competitiveness: efficiency, competition and differentiation," Documentos de trabajo de la Facultad de Ciencias Económicas y Empresariales 98-10, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales.
    21. Gilroy, Bernard Michael, 1998. "International Competitiveness, Multinational Enterprise Technology Clubs and the Government Interface," MPRA Paper 17983, University Library of Munich, Germany.
    22. Kox, Henk L. M. & Van der Tak, Casper M., 1996. "Non-transboundary pollution and the efficiency of international environmental co-operation," Ecological Economics, Elsevier, vol. 19(3), pages 247-259, December.
    23. Klodt, Henning, 1992. "Theorie der strategischen Handelspolitik und neue Wachstumstheorie als Grundlage für eine Industrie- und Technologiepolitik?," Kiel Working Papers 533, Kiel Institute for the World Economy (IfW).

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