A Theory of Trade Policy Under Dictatorship and Democratization

Benjamin Zissimos

No 1403, Discussion Papers from University of Exeter, Department of Economics

Abstract: This paper develops a new model of trade policy under dictatorship and democratization. The paper makes two contributions. One is to provide a deeper understanding of the relationship between political institutions and economic performance by studying the endogenous interaction between the form of government and trade policy. If a ruling elite own a factor that is scarce then democratization goes hand in hand with trade liberalization and an increase in economic efficiency, as argued by classical scholars. But if the elite own an abundant factor then democratization is accompanied by an increase in protectionism and a reduction in e¢ ciency. The paper also characterizes the circumstances under which a dictatorship can use trade policy to forestall democratization. The paper?s second contribution is to show how trade policy can be manipulated to maintain the status quo in the face of world price shocks, thus opening the door to a re-examination of trade policy responses to technology shocks. The model is used to explain an interesting episode of trade policymaking between 1815 and 1846, during which time Britain substantially liberalized trade while Prussia, on the other side of the grain market, signi?cantly increased protectionism. It is also used to shed light on the wide-spread imposition of export restrictions in response to the 2007-08 food crisis.

Keywords: Efficiency; institutions; protectionism; social con?ict; trade policy. (search for similar items in EconPapers)
JEL-codes: D30 D74 F11 F13 P14 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-int and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://exetereconomics.github.io/RePEc/dpapers/DP1403.pdf (application/pdf)

Related works:
Journal Article: A theory of trade policy under dictatorship and democratization (2017)
Working Paper: A Theory of Trade Policy under Dictatorship and Democratization (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:exe:wpaper:1403

Access Statistics for this paper

More papers in Discussion Papers from University of Exeter, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Sebastian Kripfganz ().