Unilateral tariff liberalisation

Richard Baldwin

No 8162, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Unilateral tariff liberalisation by developing nations is pervasive but our understanding of it is shallow. This paper strives to partly redress this lacuna on the theory side by introducing three novel political economy mechanisms with particular emphasis is on the role of production unbundling. One mechanism studies how lowering frictional barriers to imported parts can destroy the correlation of interests between parts producers and their downstream customers. A second mechanism studies how Kojima?s pro-trade FDI raises the political economy cost of maintaining high upstream barriers. The third works via a general equilibrium channel whereby developing country?s participation in the supply chains of advanced-nation industries undermines their own competitiveness in final goods, thus making final good protection more politically costly. In essence, developing nations? pursuit of the export-processing industrialisation undermines their infant-industry industrialisation strategies.

Keywords: Unilateral tariff liberalisation; Race-to-the-bottom; Political economy (search for similar items in EconPapers)
JEL-codes: F1 F13 F15 (search for similar items in EconPapers)
Date: 2010-12
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Citations: View citations in EconPapers (14)

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Related works:
Working Paper: Unilateral tariff liberalisation (2011)
Working Paper: Unilateral Tariff Liberalisation (2010)
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