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The Politics of International Trade

Authors: Ethier, Wilfred J.; Hillman, Arye L.;

The Politics of International Trade

Abstract

Traditional international trade models explain the sources of comparative advantage and show how a country as a whole gains from trade and from terms-of-trade improvement. The traditional models assumed competitive market-determined outcomes with passive or benevolent government. Income-distribution consequences of trade policy were noted. The models did not address the politics of trade policy, the study of which requires two premises consistent with public-choice principles: (1) that political self-interest underlies policy decisions rather than benevolent-government social-welfare objectives, and (2) political decision makers prefer creation of politically assignable rents to non-assignable budgetary revenue or aggregate country-wide gains from free trade or terms-of-trade improvement. These two premises are acknowledged in the first-generation of models of politicized trade policy. A second generation of models includes the first but not the second premise. It is documented that public-choice premises have not always been included in mainstream economic models. The second-generation models devoid of the primacy of rents in trade-policy determination are mainstream for many members of the academic international trade community. The chapter explains how, by not including the political preference for rents over budgetary revenue, the second-generation models are at variance with the actual conduct of trade policy. Public-choice concepts are also used to re-evaluate a wide range of traditional trade-policy conclusions and recommendations. Empirical evidence is reviewed and interpreted.

Keywords

ddc:330, rent creation, trade negotiations, F13, political support, budgetary revenue

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citations
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
1
Average
Average
Average
bronze