Political Economy Of Trade Research Articles

P. J. Thomas’s Scholarship on Mercantilism and the Political Economy of Trade: A Centennial Appreciation and Assessment

This article addresses the contribution of the Indian economist P. J. Thomas to the scholarship of mercantilism and the political economy of trade. It considers Thomas’s 1926 book, Mercantilism and the East India Trade, and interprets Thomas’s account of trade issues in the late seventeenth century in terms of the graphical analysis of the imperfect substitutes model. It contrasts Thomas’s work with that of Jacob Viner and sets his work in a larger context of culture and technology. The article concludes that Thomas’s scholarship deserves to be rediscovered within the fields of international economics and global political economy.

Political Economy of Trade in BIMSTEC: A Contemporary Perspective

BIMSTEC has completed more than two decades of its existence, with 2022 marking the regional grouping’s 25th anniversary. In this article, we study the nature and evolution of BIMSTEC, as we discuss and analyse the nature of intra-regional trade, with a focus on BIMSTEC member countries’ trade with India and China. We also highlight the political challenges and hindrances to increasing intra-regional trade. The China factor and its expanding footprint among these countries is analysed. The article concludes with suggestions and unique pathways that BIMSTEC can emphasize in creating a common identity, that is, focusing on connectivity and improved logistics as well as establishing a BIMSTEC university for exchange of ideas and building trust. The article fills the existing gap in the literature by comparing India and China’s trade with BIMSTEC countries, emphasizing the creation of the soft power appeal of BIMSTEC to make it a more viable regional organization.

Agricultural Comparative Advantage and Legislators’ Support for Trade Agreements

Does comparative advantage explain legislators’ support for trade liberalization? We use data on potential crop yields as determined by weather and soil characteristics to derive a new plausibly exogenous measure of comparative advantage in agriculture for each district in the United States. Evidence shows that comparative advantage in agriculture predicts how legislators vote on the ratification of preferential trade agreements in Congress. We show that legislators in districts with high agricultural comparative advantage are more likely to mention that trade agreements are good for agriculture in House floor debates preceding roll call votes on their ratifications. Individuals living in the same districts are also more likely to support free trade. Our analysis and results contribute to the literature on the political economy of trade and its distributional consequences and to our understanding of the economic determinants of legislators’ voting decisions.

Chinese Investments in Nigeria and the Political Economy of Trade, 1999 - 2019: A Leadership Perspective

This article explores the nature and patterns of Chinese-Nigeria trade relations between 1999 and 2019 through the theoretical prism of leadership. The period 1999-2019 captures the rising trends in investments and trade relations between China and Nigeria and the latter’s efforts at liberal democratization. It raises questions about how the nature of the leadership process conditions economic developments and as well shapes the nature of trade and investments between both countries. Although the article is not necessarily comparative, it demonstrates how the contrasting character of the internal leadership process throws up inclusivity, accountability, productivity and development in China, and exclusion, opportunistic behaviour and underdevelopment in Nigeria. The article thus argues that leadership is dialectically connected to the political economy of development and trade in both China and Nigeria. Drawing on historical and statistical data relating to Chinese Foreign Direct Investments, aid/loans to Nigeria and Chinese-Nigeria trade patterns, it explains that economic relations between both countries are characterized by unequal exchanges in favour of the Chinese state. The major contention of the article is that while Nigeria does benefit from Chinese trade, loans and investments in terms of job opportunities and infrastructural developments, such benefits further deepen Nigeria’s underdevelopment and dependence on China as a result of the extractive behaviour of Nigeria’s political leaders. Nevertheless, a better developmental outcome is possible in Nigeria through transformational leadership that leads to profound changes in policies, institutions and values of accountability.

Role of the WTO in the Development of International Trade and Economic Sustainability

In the article, the role of the World Trade Organisation (WTO) in the development of international trade and economic sustainability has been analysed. The author explores specific challenges / factors that affect economic sustainability and fair trade as well as political economy of trade and negotiations as the tools of the WTO. It is argued that economic stability and the process of democratisation are essential to ensure international and fair trade. Under democracies those countries are implied where the rate of economic stability is high according to the principles established by international norms, i.e. where market economy, internal democracy, transparent trade system, human rights, trade neutrality, etc. are observed. Almost every country where these democratic norms are applied has trade partnerships with the others rather than conflicts. For international trade to occur it is essential to have a competitive market system in a country since competition is a characteristic feature of international trade that can be safeguarded through observation of democratic principles and political stability. Development of free trade by the WTO depends precisely on implementation of these fundamental principles. In view of the abovementioned factors, the article quite legitimately studies interconnection between the WTO and economic sustainability. Keywords: Agreement on Trade-Related Aspects of Intellectual Property Rights, dispute settlement understanding, general agreements on tariffs and trade, regional trade agreements, World Trade Organisation.

The political economy of trade and migration: Evidence from the U.S. Congress

AbstractWe compare the drivers of U.S. congressmen's votes on trade and migration reforms since the 1970s. Standard trade theory suggests that trade reforms that lower barriers to goods from less skilled‐labor abundant countries and migration reforms that lower barriers to low‐skilled migrants should have similar distributional effects, hurting low‐skilled U.S. workers while benefiting high‐skilled workers. In line with this prediction, we find that House members representing more skilled‐labor abundant districts are more likely to support trade and migration reforms that benefit high‐skilled workers. Still, important differences exist: Democrats are less supportive of trade reforms than Republicans, while the opposite is true for migration reforms; welfare state considerations and network effects shape votes on migration, but not on trade.

From Conflict to Coalition: Profit-Sharing Institutions and the Political Economy of Trade. By Adam Dean. Cambridge: Cambridge University Press, 2016.

<i>From Conflict to Coalition: Profit-Sharing Institutions and the Political Economy of Trade</i>. By Adam Dean. Cambridge: Cambridge University Press, 2016.

The Impact of the Rise Global Supply Chains on the New Tendencies in the Contemporary Foreign Trade Policy

The main aim of the article is indication of impact of the rise global supply chains on the new tendencies in contemporary foreign trade policy. The subject of the discussion and theoretical contribution in the undertaken research program is presents new tendencies in international trade—the rise of global supply chains, the impact of the rise global supply chains on the political economy of trade and countries motivations for cooperating on trade policies and the rise of global supply chains and increasing importance of bilateral agreements in the foreign trade policy. It is important to underline that a few multinational firms are responsible for a major share of world trade and for the rise of global supply chains. On the one hand, these firms should support regulatory harmonization across different Preferential Trade Agreements (PTAs) in order to lower trade costs. On the other hand, they might also resist harmonization—and encourage certain non-tariff measures—in order to prevent new competitors from entering markets. This may partly explain the persistence of regulatory divergence, and suggests that the political economy of regulatory convergence, especially in the conditions of the rise global supply chains, may be more important and more complex than is sometimes suggested.

Occupation and the Political Economy of Trade: Job Routineness, Offshorability, and Protectionist Sentiment

AbstractThe recent backlash against globalization in many advanced economies raises questions about the source of this protectionist sentiment. Traditional accounts generally attribute the welfare consequences of trade to skill level or industry characteristics, or instead emphasize the nonmaterial determinants of support for openness. Consequently, we know little about how a major labor market characteristic—occupation—shapes both the distributional consequences of and preferences toward trade openness. We propose and test a new theory of trade policy preferences based on occupation characteristics. Drawing from the tasks literature in economics, we argue that occupation characteristics are a key determinant of how trade affects workers and thus individuals' trade preferences. Our theory suggests that, in advanced economies, individuals in routine-task-intensive occupations will be negatively affected by trade, and thus more protectionist. This relationship will increase in the degree to which occupation job tasks can be provided from a distance (i.e., offshorable). We find support for our theory using data from the 2003 and 2013 International Social Survey Programme in high-income democracies. Our results suggest that the occupational characteristics of routineness and offshorability are important determinants of trade preferences, offering additional understanding of the sources of protectionist sentiment even after controlling for labor market characteristics suggested by conventional wisdom.

Bilateral trade agreements and the rise of global supply chains

This paper investigates the influence of the rise global supply chains on bilateral trade agreements. Given that a few multinational firms are responsible for a major share of world trade, our findings suggest that these firms may support regulatory harmonization across different Preferential Trade Agreements (PTAs) to lower trade costs or resist harmonization – and encourage certain non-tariff measures – to prevent new competitors from entering markets. The finding partly explains the persistence of regulatory divergence. Building on institutional and comparative trade hypothesis, the findings of the paper present new tendencies in the foreign trade policy: the impact of the rise global supply chains on the political economy of trade, motivations for countries in cooperating on trade policies, and the increasing importance of bilateral agreements in the foreign trade policy. Additionally, the findings suggest that the political economy of regulatory convergence may be more complex than is sometimes suggested in the prior literature.

The Gilded Wage: Profit-Sharing Institutions and the Political Economy of Trade

Scholars of international political economy often argue that workers automatically share the same trade policy preferences as their employers. However, this approach assumes that trade policies that increase profits necessarily lead to increases in wages. In contrast, I argue that capital and labor are more likely to share the same trade policy preference when “profit-sharing institutions” permit capital to credibly commit that an increase in profits will lead to an increase in wages. In support of my argument, I present a structured, focused comparison of the American textile and steel workers' unions during the late nineteenth century. Both unions supported the high tariffs that protected their industries when credible profit-sharing institutions were in place, but did not support high tariffs when such institutions were absent.

Plurilateral Agreements and Global Trade Governance: A Lesson from the OECD

A key lesson from failure at the Organization for Economic Cooperation and Development (OECD) to negotiate a multilateral agreement on investment is that attempts to reduce barriers to trade and investment will fail without broad-based domestic support for open markets. This article applies that lesson to the faltering Doha Round of multilateral trade negotiations and argues that the deadlock is due to the collective failure to make-the-case for liberalization rather than, as is commonly suggested, the systemic constraints of a 'single undertaking' or the ascendancy of emerging powers. Deadlock in the Doha Round has triggered the pursuit of alternatives to multilateral negotiation. The result is increased emphasis on plurilateral approaches and the further entrenchment at the centre of trade diplomacy of preferential trade agreements (PTAs) - such as those being negotiated across the Pacific and the Atlantic. This article outlines the powerful motivations behind PTAs but also the dangers, including of limited welfare gains, disincentives to non-discriminatory liberalization and increased complexity and discord in international rule making. Plurilateral agreements involve particular risks for developing countries, whether through marginalization from single-issue agreements or asymmetric pressure within multi-issue PTAs. This article concludes that an effective, first-best, multilateral response to the challenge of the political economy of trade will require that trade liberalization be placed more firmly within the framework of sound domestic economic policy and that top-down liberalization, including through the G20 process, be accompanied by more effective bottom-up advocacy of the gains from market opening.

Storehouse and sanctuary: the role of Brazil in world food security

Natural endowments such as land availability, abundant water, fertile soils, and favorable climate combined with decreasing population growth place Brazil as the leading force in world food production. Brazil is also the guardian of the most diverse eco-systems in the planet and is continuously wrestling between the expansion of the agricultural land area and the preservation of the most diverse fauna and flora, embodied in the Amazon forest. Addressing the international political economy of trade and food security from a Brazilian perspective, this paper argues that the main obstacles facing Brazil in food security are not domestic, but international. International political issues are at the core of the most relevant hurdles and understanding the reciprocal relationship between world food security and the emerging economies position especially that of Brazil in food production and trade is crucial. I argue that comprehending the elements that constrain the present and future role of Brazil in fulfilling its potential as food supplier in an ecologically and economically sustainable path, as well as its new found role as agricultural cooperation partner in the promotion of a food safe world is paramount if the world is to feed 7 billion mouths.

Economic Liberalism in Illiberal Regimes: Authoritarian Variation and the Political Economy of Trade1

Over the last few decades, a vast literature has emerged examining the relationship between democratic political institutions and trade policy outcomes. While this literature has added significantly to our knowledge, it has effectively ignored policymaking in dozens of important states—those that remain autocratic. This paper fills that hole by exploring the effects of authoritarian variation on national trade policies. Our contention is that more institutionalized authoritarian regimes will tend to adopt more open trade policies. This relationship should hold, we argue, for two distinct reasons. First, we argue that autocratic regimes with larger “selectorates” should have greater incentives to provide public rather than private goods. As a result, we expect that multiparty, and to a lesser extent single-party, autocracies will tend to prefer more open trade policies than non-party (often personalistic) dictatorships, monarchies, and military juntas. Second, we contend that more stable autocratic regimes will have longer time horizons and therefore greater incentives to adopt policies, such as trade openness, that may strengthen long-run economic performance. We find strong support for these arguments using several cross-national time-series models of all autocracies ranging from 1962 to 2007 (contingent on data availability).

The Political Economy of Trade and Migration: Evidence from the U.S. Congress

Over the last decades, the United States has become increasingly integrated in the world economy. Very low trade barriers and comparatively liberal migration policies have made these developments possible. What drove US congressmen to support the recent wave of globalization? While much of the literature has emphasized the differences that exist between the political economy of trade and migration, in this paper we find that important similarities should not be overlooked. In particular, our analysis of congressional voting between 1970 and 2006 suggests that economic drivers that work through the labor market play an important role in shaping representatives’ behavior on both types of policies. Representatives from more skilled-labor abundant districts are more likely to support both trade liberalization and a more open stance vis-a-vis unskilled immigration. Still, important systematic differences exist: welfare state considerations and network effects have an impact on the support for immigration liberalization, but not for trade; Democratic lawmakers are systematically more likely to support a more open migration stance than their Republican counterparts, whereas the opposite is true for trade liberalization.

Jordan and the United States: the political economy of trade and economic reform in the Middle East

Relations between the United States and the Middle East are going through a period of significant change in which the use of force in pursuit of national interests has proved to be increasingly counter-productive. A new policy direction has been adopted which seeks to promote economic integration, development and cooperation. The recent proliferation of US-Middle East free trade agreements is a corner-stone of this new foreign policy approach. Imad El-Anis here offers an analysis of how free trade and economic integration can impact US-Middle East relations by using the Jordan-US relationship as an example. This book is essential reading for those wishing to understand the new direction of US foreign economic policy towards the Middle East and the accompanying reforms taking shape in the Arab world.

The paradox of weakness in the politics of trade integration

In his 1960 seminal contribution to game theory and its applications, The Strategy of Conflict, Thomas Schelling suggested that in international negotiations, strong international opposition may be an asset rather than a liability. Rather than constraining it, the opposition would enlarge the opportunity set thus making it easier to successfully conclude international negotiations. This property, which is also known as the Schelling-conjecture, shares some aspects with constitutional economics, namely the two-level approach suggesting that it might be beneficial for all parties to give up some power by tying one’s hands. In this paper we examine by means of a simulation study how far we can take this notion in the politics of trade integration. In explicitly marrying Schelling’s 1960 idea with the 1988 two-level approach by Putnam and embedding the result into the political economy of trade we find that the threat of a domestic opposition or national institution having a veto power frequently but not always delivers a more favorable outcome for the respective trade representative at the international table. Whether the Schelling-conjecture applies or not actually depends on the subtle interplay of a “bully effect” and a “serenity effect”.

Hong-Seok Yang, The Political Economy of Trade and Growth: An Analytical Interpretation of Sir James Steuart's “Inquiry”, Edward Elgar, 1994, x+323p.

Hong-Seok Yang, The Political Economy of Trade and Growth: An Analytical Interpretation of Sir James Steuart's “Inquiry”, Edward Elgar, 1994, x+323p.

Book Review: JANE KELSEY, Serving Whose Interests? The Political Economy of Trade in Services Agreements. Abingdon: Routledge-Cavendish, 2008, 400 pp. ISBN-10 0415448220, £29.99 (pbk)

Book Review: JANE KELSEY, Serving Whose Interests? The Political Economy of Trade in Services Agreements. Abingdon: Routledge-Cavendish, 2008, 400 pp. ISBN-10 0415448220, £29.99 (pbk)

Jane Kelsey, Serving Whose Interests? The Political Economy of Trade in Services Agreements

Serving Whose Interests is an examination of the General Agreement on Trade in Services [GATS] since its inception in 1995, with several case studies that discuss services trade in specific applications around the world. The scholarship i s extensive and detailed. Jane Kelsey, law professor at the University of Auckland, has criticized the pro-market services trade regime i n her role as a political activist. In this book, her goals are to make the technicalities of trade rules accessible and to show their effects on people and communities.