The Comparative Politics of Trade Policy

National Bureau Of Economic Research Inc, Cambridge MA

Investigators

Abstract

Patterns of import protection and export promotion vary widely across countries. So do methods of industry support. Part of this variation reflects differences in economic structure and in the political organization and activities of industry interest groups. But political institutions matter as well. Whereas much recent research has focused on the relationships between voters, interest groups, and politicians that help determine trade policy in a particular political setting, much less is known about the role that political institutions play in the formation of trade policy. In this project, the principal investigators will examine how variation in political institutions translates into predictable and testable differences in the structure and form of trade protection and industry support. Comparative politics is, of course, one of the core fields in political science, where it has a long and venerable tradition. But, whereas political scientists often focus on the implications of different political institutions for political outcomes . such as the number of political parties that are active in a country, the stability of the government, and the representation of minority groups . the principal investigators will address the effects on economic policy outcomes. By studying the comparative politics of trade policies, they will contribute importantly to the analysis of political regimes. The existing formal models of presidential and parliamentary democracies are quite rudimentary and do not allow for political parties and interest groups as distinct participants in the political process. The principal investigators will develop extensions of the formal theory that will add significantly to its realism and domain. The principal investigators are well known for their earlier research on the political economy of trade policy. That work, published in numerous articles and two books, focuses on the role that special interest groups play in the policy process. Whereas the earlier research assumed a particular, stylized political regime with a given set of institutions, the principal investigators now intend to re-focus their analysis on a comparison of outcomes in different political settings. This project will contribute to our understanding of trade policy formation and of the importance of political institutions. The principal investigators will investigate how trade policies depend on the strength of party discipline, how outcomes differ in presidential versus parliamentary political systems, how trade policies are affected by electoral rules and by the organization of the trade bureaucracy. Moreover, they will examine how the institutional setting affects the incentives facing industry lobby groups and will ask which institutional arrangements are best able to generate policies that serve the general interest of the polity. Thus, the project will help identify characteristics of the institutional setting and trade bureaucracy that can contribute to the formation of better trade policies. The project also will develop new conceptual tools that will help other researchers study the democratic policy process for a wider range of economic policies. The results will be disseminated widely to the research communities in the social sciences via journal publication and participation in national and international conferences. The authors plan to integrate graduate students into the project; they will help to assemble data, check the analytical results, and prepare computer simulation models. In this way, the project will promote the education of the next generation of researchers in economics and political science.