dutt-mitra -- political ideology and endogenous trade policy

dutt-mitra -- political ideology and endogenous trade...

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NBER WORKING PAPER SERIES POLITICAL IDEOLOGY AND ENDOGENOUS TRADE POLICY: AN EMPIRICAL INVESTIGATION Pushan Dutt Devashish Mitra Working Paper 9239 http://www.nber.org/papers/w9239 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 October 2002 We are indebted to Lawrence Broz, Marc Busch, Gary Engelhardt, Robert Feenstra, Jeffry Frieden, Gordon Hanson, Cem Karayalcin, Philip Levy, Will Martin, Matthew Slaughter, Connie Smith, and Dimitrios Thomakos for valuable comments and suggestions. We also thank seminar audiences at Baruch College, the Canadian Economic Meetings (2002, Calgary), NBER Summer Institute 2002, Syracuse University, the University of Alberta, the University of Calgary, the World Bank, and Yale University for useful discussions. The views expressed herein are those of the authors and not necessarily those of the National Bureau of Economic Research. © 2002 by Pushan Dutt and Devashish Mitra. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source.
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Political Ideology and Endogenous Trade Policy: An Empirical Investigation Pushan Dutt and Devashish Mitra NBER Working Paper No. 9239 October 2002 JEL No. F10, F11, F13 ABSTRACT In this paper, we empirically investigate how government ideology affects trade policy. The prediction of a partisan, ideology-based model (within a two-sector, two-factor Heckscher-Ohlin framework) is that left-wing governments will adopt more protectionist trade policies in capital rich countries, but adopt more pro-trade policies in labor rich economies than right-wing ones. The data strongly support this prediction in a very robust fashion. There is some evidence, that this relationship may hold better in democracies than in dictatorships though the magnitude of the partisan effect seems stronger in dictatorships. Pushan Dutt Department of Economics University of Alberta Edmonton, Alberta CANADA T6G 2H4 pdutt@ualberta.ca Devashish Mitra Department of Economics The Maxwell School of Citizenship & Public Affairs Syracuse University 133 Eggers Hall Syracuse, NY 13244 and NBER dmitra@maxwell.syr.edu
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1 Introduction Political ideology has been conceptualized in a number of ways giving rise to a multiplicity of meanings and interpretations. One view is that it stands for the self-de¯ned notions of public interest and altruistic goals of politicians and political parties, which form the basis for most of economic policy making. 1 Another view is that the interests of constituents and ideological pref- erences of politicians are interrelated, with the former probably determining the latter. 2 However, in between these two extremes, is the position that pure altruistic, public-interest motivations as well as constituents' interests are both important in determining the ideological positions taken by political parties and politicians.
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