The Determinants of Individual Trade Policy Preferences: International Survey Evidence

1. Introduction

What determines trade policy? While this may seem to be mainly a question for political
scientists, it has become of increasing concern to international trade theorists, faced with the obvious
disjunction between the free trade prescriptions of standard trade models, and the protectionist
policies pursued by so many governments (Rodrik 1995). The intellectual stakes for economists have
increased further with the advent of endogenous growth models, which predict that policies can have
important long run growth effects, as opposed to the fairly trivial deadweight losses implied by static
constant returns models. Clearly, it is not sufficient to take these policies as exogenous, and examine
their implications: to understand growth, the theory seems to be telling us, we need to understand
why some countries pursue appropriate policies, and others inappropriate ones.

When faced with such questions, the instinct of economists is to eschew state-centred or
cognitive theories, and to reach for the rational choice approach: politicians supply policies; voters
and/or interest groups demand them; the institutional environment helps determine the ways in which
these demands and supplies interact with each other, and thus the eventual equilibrium. In these
models, a key consideration is the determination of individual voter preferences, which in turn
depends on the structure of the economy in question. In an environment in which factors are ‘stuck’
in particular sectors, as in the specific factors model, factors have a direct stake in those particular
sectors; thus, management and labor in each sector will agree with each other that their sector
deserves protection (if it is an import-competing sector), or that free trade is the best policy (if it is an
exporting sector). On the other hand, if factors are mobile between sectors, as in the Heckscher-Ohlin
model, then unskilled workers everywhere will have the same interest (since they all earn the same
wage), as will skilled workers, and capital, and all other relevant, mobile, factors of production. In
this case, ‘abundant’ factors will favor free trade, and ‘scarce’ factors will favor protection
(Rogowski 1989). Classic economic contributions to the literature, such as Findlay and Wellisz
(1982), Mayer (1984), Magee, Brock and Young (1989), and Grossman and Helpman (1994), all
assume such a rational choice world, with some adopting a specific factors specification, and others a

<<   1   2   3   4   5   >>

More intriguing information