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International Political Economy (Voter's Trade Preferences (Economic…
International Political Economy
Voter's Trade Preferences
Economic Self Interest
Heckshler-Ohlin/ Stoper-Samuelson Theory
Owners of the abundant
factors
benefit from trade while owners of the scarce factor are hurt by it
Scheve and Slaughter (2001)
find support for this in individual level data from the 1993 NES
Ricardo Viner Theory
Those in exporting
sectors
benefit from trade while those in importing sectors are harmed by it
NNTT
Firms are heterogeneous in productivity
Those in exporting
firms
benefit from trade while those in importing firms are hurt by it
differences are within industry and between firms
Scope Conditions
Products must be differentiated
Products must be tradable
Return to scale, Consumers like variety
EVIDENCE
Firm Profits
Bacini et al (2017)
find that trade liberalization has differential effect at the firm level, and does indeed benefit the most competitive firms and lead to a concentration of the market.
Firm Opinions
Firms are more likely to support liberalization based on their characteristics than on industry wide comparative advantage
(Osgood et al 2017)
Lobbying Patterns
(Milner 1987)-
Firms with the most to gain in post war world push for continued openness after oil shocks
Public Statements (Outside Lobbying) -
Osgood 2016
Osgood 2017
- product differentiation is highly correlated with both public statements and trade lobbying in industries.
* Bombardini and Trebbi (2012)
- Lobbying behavior among differentiated industries is primarily alone while in competitive industries it is primarily through sector organizations.
New Trade Theory
Problems with old Trade theory
Most trade is between developed countries
Most trade is within industries, not across
Consumers like variety
Increasing Returns to scale
Sociotropic Perceptions
Voters have little information
(Rho and Tomz 2017)
Mansfield and Mutz (2009)
find that voters' opinions are primarily driven by what they think is good for the economy, rather their their own economic self interest
Education variable may actually be capturing this sociotropic influence
Governments and Trade Policy
Governments
The ideas government's have about economics can affect them are causally important in the policies they take. (Krueger 1997) and the example of the colonial economics field
Endogeneous Protection
Grossman-Helpman Model
Interest groups bid for protection while the goverment balances between concern for the general welfare and desire for contributions (
Grossman and Helpman 1992)
(Golberg et al 1999)
, broad support for GH model, but finds government weighs general welfare over contributions
(Gawande, and Bandyopadhyay 2000)
- find support for GH model but finds contribution and welfare are equally weighted
Parties
Parties have different issue positions on trade based on their coalitions. Leftist parties are more protectionist from labor coalitions.
Milner and Judkins 2004.
Dutt and Mitra 2005
connect party trade positions to HO model and coalition types
Parties have an independent role above and beyond what matters (
Epstein and OHalloran 1996)