The Relevance of Ricardian Trade Theory for the Political Economy of Trade Policy

2017 ◽  
pp. 185-187
Author(s):  
Wilfred J. Ethier
Keyword(s):  
Political Economy ◽  
Trade Policy ◽  
The Political ◽  
Trade Theory ◽  
Ricardian Trade Theory

Political Economy of Protection

2021 ◽  
Author(s):  
Xenia Matschke
Keyword(s):  
Political Economy ◽  
Trade Policy ◽  
Data Availability ◽  
Future Research ◽  
The Political ◽  
Surprising Result ◽  
Trade Theory ◽  
Economic Agents ◽  
General Welfare ◽  
Political Interaction

The political economy of protection is a field within economics, but it has significant overlap with its sister discipline, political science. For a political economy of protection, one needs at a minimum two types of economic agents: political decision makers who provide protection, and economic agents who are protected or even actively seek protection. The typical political economy scenario leads to an economic outcome that is not Pareto-optimal: From a general welfare perspective, the political interaction is not desirable. An important task of political economy research is to explain why and how political interaction takes place. For the first part of the question, it appears clear that if protection is actively sought, the protection seeker intends to benefit from his activities. However, if the policymakers were truly interested in Pareto optimality and welfare maximization, they would refuse to protect. Hence a crucial assumption in the political economy literature is that the politicians’ objective function differs from the general welfare function. For the second part of the question, theoretical political economy models consider either the election campaign phase when politicians are eager to win a majority of votes (preelection models) or the phase when the politicians have been elected and may benefit from the spoils associated with holding office (postelection models). Whereas in the election phase, politicians have an incentive to cater to the interests of that part of the electorate that is considered pivotal for the election outcome, in the postelection phase they may be open to, for example, special interest group (SIG) influences from which they derive utility. A first wave of theoretical political economy models originates from the 1980s. Building on these early advances, more elaborate models have been proposed. The most prominent one is the Grossman–Helpman protection for sale (PfS) model. It delivers a postelection general equilibrium framework of trade policy determination. In this common agency model, industry interest groups act as principals and offer the government a menu of contracts of campaign contributions in exchange for trade policy. The PfS model predicts that industries that lobby for protection will obtain trade protection in equilibrium, whereas nonlobbying industries will face import subsidies. Numerous papers have evaluated the PfS model empirically and found that the implied weight on contributions in the governmental welfare function and the implied share of the population represented by lobbies are both very high. Remedies for this surprising result exist, but it has also been argued that the found empirical regularities may be spurious. At the beginning of the 21st century, the majority of political economy literature is still theoretical, but better data availability increasingly offers the opportunity to empirically test theoretical results. A number of challenges remain for the political economy literature, however. In particular, more work is required to better understand policymaker interests. Moreover, an incorporation of political economy aspects into the new trade theory models that allow for intra-industry trade and firm diversity appears to be a promising avenue for future research.

THE POLITICAL ECONOMY OF TRADE POLICY

1989 ◽  
Vol 1 (3) ◽  
pp. 301-314 ◽  
Author(s):  
Douglas Nelson
Keyword(s):  
Political Economy ◽  
Trade Policy ◽  
The Political

scholarly journals POLITICAL AND ECONOMIC CONTENT OF THE THEORY OF INTERNATIONAL TRADE

2021 ◽  
Vol 118 (5) ◽  
pp. 48-65
Author(s):  
ONYSHCHENKO Volodymyr
Keyword(s):  
International Economic ◽  
Political Economy ◽  
International Trade ◽  
Trade Policy ◽  
State Level ◽  
Trade Theory ◽  
Economic Relations ◽  
International Economic Relations ◽  
The Subject ◽  
The Impact

Background. Dynamic changes in international economic relations and trade for thorough analysis and forecasting require an adequate paradigm of international trade theory, which would take into account not only economic and political factors of its development, but also the diverse civilizational context of the world community, which determines mental, social and cultural features of the development of a country. Problem research state. Problems of political economy in international trade to some extent affect the research of P. Krugman, M. Obstfeld, J. Frieden, E. Helpman, P. S. Afontsev, A. Mazaraki, T. Melnyk, V. Panchenko, N. Reznikova and others. But the structure of its methodological discourse and the subject of its research remain unclear. The aim of the articleis to clarify the political and economic discourse of the theory of international trade. Materials and methods. The materials of the research were the works of domestic and foreign specialists. In the process of preparing the article, general scientific research methods were used: historical, logical analysis, synthesis and abstraction. Results. Political economy is a normative manifestation of economic theory, which is formed under the influence of socio-economic and political concepts, the formed goals of social development. The subject of political economy of international trade – economic and socio-political relations that determine and accompany international trade and determine the goals and content of trade policy of its subjects. It is proposed to expand the mechanism of formation of relative advantages and trade policy of the country by including factors that determine not only its economic potential and specialization, but also the risks that may be caused by political decisions. It is argued that the problem of «protectionism vs liberalism» in international trade at the state level will always exist. It turns out that the problem of justice in international economic relations and trade is determined by the civilizational content of the development of countries, in which human capital plays a crucial role. Conclusion. The paradigm of political economy in international trade should be based on an expanded interpretation of relative benefits by assessing the impact of economic, social and political institutionson them, the peculiarities of national trade policies.

The Political Economy of Trade Policy

10.1142/8989 ◽  
2013 ◽  
Author(s):  
Devashish Mitra
Keyword(s):  
Political Economy ◽  
Trade Policy ◽  
The Political
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