Trade Liberalization and Regime Type: Evidence from a New Tariff-line Dataset∗ (original) (raw)
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Do democracies face more or less political pressures to protect certain industries than nondemocracies? How important are a trading partner’s political institutions in overcoming timeinconsistency problems? While domestic political institutions and distributional conflicts across disparate industries have long been central to theories of international political economy, few empirical studies examine liberalization trajectories across industries, let alone countries’ partnerspecific policy differences. We collect 5.2 billion observations of applied tariff rates that 136 countries differentially apply to their trading partners, incorporating the universe of preferential rates and Generalized System of Preferences (GSP) at the tariff line level. To incorporate the rich structure and volume of our data, we develop a Bayesian multilevel estimator that distinguishes the effects of political institutions across industries and trading partners. We find that pairs of democracies achieve grea...
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American Political Science Review, 2002
Specifically, are the aggregate trade barriers agreed upon by a democratic pair lower than those by a pair composed of a democracy and an autocracy? I revisit these important questions by highlighting some problematic aspect of the analysis by . Contrary to their central conclusion, I find that whether the aggregate trade barriers are lower for a democratic pair than those for a mixed pair depends on the preferences of the decision makers involved. Thus, although domestic political institutions are important, they alone are insufficient to predict a higher level of cooperation among democracies.
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Journal of International Relations and Development, 2017
This paper contributes to the ongoing debate on the relationship between democracy and the liberalisation of international trade. A number of well-known works in international political economy have argued that democracy promotes trade liberalisation. However, these previous studies have taken trade policy as a whole and largely ignored the sub-dimensions of trade policy. In this paper, we disaggregate trade policy into tariff barrier, trade facilitation and trade openness and argue that democracy reduces trade barrier and promotes trade facilitation, but does not necessarily make the economy more dependent on trade. We test our hypotheses using a panel of about 150 developed and developing countries in the period from 1974 to 2014 and estimate four equations to obtain four different estimators for each dependent variable of interest. Specifically, we investigate the effects of democracy on tariff barrier, trade facilitation and trade openness using pooled OLS, fixed effect (FE), instrumental variable (IV) and system general method of moments (GMM) estimators. Overall, our hypotheses receive good empirical support. With other confounding factors being controlled for, democracy is negatively associated with tariff rate, positively associated with the Logistics Performance Index, but there is no evidence that democracy increases a country's trade openness.
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The Effects of the Electoral Regime on Trade Policy
This paper studies how tariffs will vary with the mechanism used to elect that country's legislature. In particular, we study tariff policy under legislatures elected by a majoritarian election rule in single member constituencies and under a proportional, or party-list, rule. We develop a theoretical model in which office-seeking politicians' decisions regarding tariff sa re de- termined by their electoral institution. We find that proportional systems have higher average tariffs than majoritarian systems, and that under both systems, sectors with higher levels of employment will recieve higher tariffs, but that the effect will be more pronounced under a pro- portional electoral rule. Finally, we test this model empirically, and find that these predictions are borne out by the data.
How Electoral Institutions Change the Influence of World Trade Integration on Trade Policies
SSRN Electronic Journal, 2014
World integration levels influence opportunity costs of maintaining restrictive national trade policies. In an integrated world, restrictive trade policies are more costly than in a context of low overall levels of world market integration. We argue that policy makers can be expected to react to these varying incentives to liberalize the trade regimes of their countries, yet do so not in a uniform fashion across countries. Rather, the responsiveness to changes in levels of world trade integration is conditional upon the electoral system the country in question employs. This is due to the fact that opportunity cost considerations increase in importance with a) the degree to which policy makers are isolated from the influence of protectionist interest groups; and b) the credibility with which losers of integration can be promised compensation. Both aspects weigh more strongly in countries that employ proportional representation as opposed to majority voting. We test this hypothesis using a model of conditional trade policy diffusion where world levels of integration are treated as diffusion influence that is interacted with a measure of the proportionality of a country's electoral system. Empirical results support the hypothesis. Moreover, it is shown that it is district magnitude as a measure of proportionality rather than the higher number of parties associated with more proportional voting rules that drives the results.
Electoral Regime and Trade Policy
Journal of Comparative Economics, 2014
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Factor Endowments, Democracy, and Trade Policy Divergence
Journal of Public Economic Theory, 2014
We develop a stochastic model of electoral competition in order to study the economic and political determinants of trade policy. We model a small open economy with two tradable goods, each of which is produced using a sector speci…c factor (e.g., land and capital) and another factor that is mobile between these tradable sectors (e.g., labor); one nontradable good, which is also produced using a speci…c factor (e.g., skilled labor), and an elected government with the mandate to …x an ad valorem import tax rate. The tax revenue is used to provide local public goods that increase the economic agents'utility. We use this general equilibrium model to explicitly derive the preferences of the di¤erent socioeconomic groups in society (e.g., landlords, industrialists, labor and skilled workers). We then use those derived preferences for policies to model the individual probabilistic voting behavior of the members of each of these socioeconomic groups. We use this model to shed light on how di¤erences in the comparative advantages of countries explain trade policy divergence between countries as well as trade policy instability within countries. We regard trade policy instability to mean that, in equilibrium, political parties diverge in terms of the political platforms they adopt. We show that in natural resource (e.g., land) abundant economies with very little capital, or in economies that specializes in the production of manufactures, parties tend to converge to the same policy platform, and trade policy is likely to be stable and relatively close to free trade. In contrast, in a natural resource abundant economy with an important domestic industry that competes with the imports, parties tend to diverge, and trade policy is likely to be more protectionist and unstable.
Trade and democracy. An empirical investigation 1
2000
Authoritative governments, like Chile in the 1970's and China today, have promoted trade openness. In the meantime, the "greatest democracy in the world", India, kept its domestic market quite closed. Democracies would leave free course to pressure from protectionist lobbies. In democracies, industrial lobbies are likely to be more organized than pro-trade consumers, because it is easier to control free-riding