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Political Institutions and Trade Protection

  • H.J. Roelfsema

Abstract Why do levels of trade protection differ so much across countries? We argue that differences in electoral rules and executive powers may play a significant role. We develop a theoretical model and show that countries that have a majoritarian electoral system may be more inclined to have a high level of trade protection. The reason is that these countries have fiercer competition for swing districts if compared to countries that have a proportional electoral system. In the empirical part of the paper we show that countries that have a majoritarian electoral system indeed have higher levels of protection. This result is robust to various measures of trade protection and to an instrumental variables approach that takes account of the endogeneity of political institutions. We find only weak support for the claim that presidentialism reduces trade protection. Key Words: Trade Policy, Protection, Constitutional Political Economy, Electoral Rules

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Paper provided by Utrecht School of Economics in its series Working Papers with number 04-06.

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Date of creation: 2004
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Handle: RePEc:use:tkiwps:0406
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