Democratic Acceptability of Free Trade: A Dynamic Approach

Gérard Fuchs

Annals of Economics and Statistics, 1997, issue 47, 245-269

Abstract: The usual models of international trade focus attention on the optimality of free trade versus any type of barrier. The present paper considers in addition a criterion of "acceptability": the choice of a trade pattern must be accepted by a majority of the population concerned, since they are also interested in preserving different elements of social protection such as a minimal wage or unemployment benefits. In the framework of a very simple model (two zones, two factors of production, two goods), where a system of quotas permits the analysis of a continuum of situations between autarky and free trade, it is shown that many configurations occur where exists a maximal level of import, maximal meaning with respect to a progressive opening of the economy with at each step majority approval. It is shown also that when a dynamic process is introduced where unskilled manpower is trained over time, then, after a sufficient lapse, the pure free trade situation may be obtained and accepted. These results thus give support to those who consider that progressive liberalization sometimes has more virtues than a brutal elimination of all trade barriers.

Date: 1997
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