What Does the Political Economy Literature on Trade Policy (Not) Tell Usthat We Ought to Know?

61 Pages Posted: 20 Apr 2005 Last revised: 22 Jul 2009

See all articles by Dani Rodrik

Dani Rodrik

Harvard University - Harvard Kennedy School (HKS); Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Date Written: September 1994

Abstract

Three questions lie at the core of the large and distinguished literature on the political economy of trade policy. First, why is international trade not free? Second, why are trade policies universally biased against (rather than in favor of) trade? Third, what are the determinants of the variation in protection levels across industries, countries, and institutional contexts? These questions are handled only imperfectly by the existing literature. Current models treat trade policy as a redistributive tool, but do not explain why it emerges in political equilibrium in preference over more direct policy instruments. Further, existing models do not generate a bias against trade, implying that pro-trade interventions are as likely as trade-restricting interventions. The greatest contribution of the political economy literature may lie in developing a better grasp of normative economic analysis--that is, in helping design policies, rules, and institutions.

Suggested Citation

Rodrik, Dani, What Does the Political Economy Literature on Trade Policy (Not) Tell Usthat We Ought to Know? (September 1994). NBER Working Paper No. w4870. Available at SSRN: https://ssrn.com/abstract=707921

Dani Rodrik (Contact Author)

Harvard University - Harvard Kennedy School (HKS) ( email )

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Centre for Economic Policy Research (CEPR)

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