Does Import Protection Act as Export Promotion? Evidence from the United States

Andrew R Dick

Oxford Economic Papers, 1994, vol. 46, issue 1, 83-101

Abstract: Strategic trade policy theory suggests how import protection can be export-promoting under increasing returns to scale. The author tests this hypothesis for 200 U.S. import-competing industries characterized by varying degrees of increasing returns to scale. After removing political economy endogeneities in tariff and nontariff barriers, targeted import protection most frequently has been export-deterring. Moreover, export deterrence has been greatest in industries displaying the strongest static or dynamic scale economies. These results are consistent with earlier evidence that protection rarely stimulates domestic output and frequently promotes inefficient firm scale and entry. Copyright 1994 by Royal Economic Society.

Date: 1994
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