Essays in Indian trade policy
Amrita Saha ()
Economics PhD Theses from Department of Economics, University of Sussex Business School
My thesis explores the political economy of trade protection in India. The first essay outlines the political economy of trade protection in India. My second essay asks: Has Protection really been for Sale in India? To answer this question, I use a unique dataset to explain the political economy of trade protection since liberalisation. The traditional Grossman and Helpman (1992) (GH henceforth) model of Protection for Sale (PFS henceforth) is used with a new measure of political organization. I undertake cross-sectional analysis for several years from 1990-2007 and use the pooled dataset. The third essay outlines the modified PFS framework that introduces a new measure of lobbying effectiveness to analyse how heterogeneity in lobbying affects trade protection. The underlying framework is based on the idea that government preferences or the market structure of the industry can influence lobbying effectiveness. The empirical evidence provides estimates on effectiveness and examines its determinants. The fourth essay explores: Is Protection still for Sale with Lobbying Effectiveness? I undertake an estimation of the modified PFS model against the conventional results presented in my second essay. I examine if differences in lobbying effectiveness can explain the variation in tariff protection levels across Indian manufacturing sectors and construct a direct measure of lobbying effectiveness for Indian manufacturing. Finally, I include additional political factors of importance to Indian trade policy. The fifth essay asks: Join Hands or Walk Alone? I examine the factors that affect the choice of lobbying strategy of Indian manufacturing firms for trade policy and consider the exclusive use of a single strategy, to lobby collectively (Join hands) and lobby individually (Walk Alone), along with the possibility of a dual strategy i.e. a combination of collective and individual lobbying using information from a primary survey across 146 firms. The results are new for India and reveal the overall preference of a dual lobbying strategy.
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