No Razor's Edge: Reexamining Alwyn Young's Evidence for Increasing Inter-Provincial Trade Barriers in China

Abstract

Alwyn Young (2000) provided evidence for distortions begetting distortions in a partially reformed economy by examining barriers to inter-provincial trade in China. His findings of increasing barriers to inter-provincial trade are based on five arguments. This paper critically examines each of the five arguments and their evidence in turn, and concludes that in all five instances neither argument nor evidence are compelling. Furthermore, if inter-provincial trade barriers cause the specific consequences advocated by Alwyn Young, then evidence for the U.S. indicates a recent history of severe inter-state trade wars in the U.S.

Keywords: Protectionism, rent-seeking, distortions, law of one price, regional comparative advantages, industrial structure, price reform, transition policies (all: China)

JEL Classification: P2, P20, P23, P24, P27, P31, D72