Race-To-The-Bottom Tariff Cutting

Pierre-Louis Vézina

No 12-2010, IHEID Working Papers from Economics Section, The Graduate Institute of International Studies

Abstract: This paper provides an empirical assessment of race-to-the-bottom unilateralism. It suggests that decades of unilateral tariff cutting in Asia?s emerging economies have been driven by a competition to attract FDI from Japan. Using spatial econometrics, I show that tariffs on parts and components, a crucial locational determinant for Japanese firms, converged across countries following a contagion pattern. Tariffs followed those of competing countries if the latter were lower, if FDI jealousy was high, and when competing countries were at a similar level of development.

Keywords: Trade policy; political economy; unilateralism (search for similar items in EconPapers)
JEL-codes: F13 F15 N75 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2010-07, Revised 2010-07
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Journal Article: Race-to-the-bottom Tariff Cutting (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:gii:giihei:heidwp12-2010

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