Working Paper: CEPR ID: DP900
Authors: Dani Rodrik
Abstract: In thinking about policy, academic economists alternate between theoretical models in which governments can design finely-tuned optimal interventions and practical considerations which usually assume the government to be incompetent and hostage to special interests. I argue in this paper that neither of these caricatures is accurate, and that there is much to be learned by undertaking systematic, analytical studies of state capabilities how they are generated and why they differ across countries and issue areas. Case studies of export subsidization in Bolivia, Brazil, India, Kenya, Korea, and Turkey are presented to confront usual presumptions against actual experience. Contrary to conventional wisdom, the successful cases (Korea and Brazil) turn out to be ones in which the government exercised discretion and selectivity, while the most uniform and non-discretionary cases (Kenya and Bolivia) were clear failures. The paradox is explained in terms of state autonomy and policy coherence.
Keywords: export subsidies; state autonomy; trade policy
JEL Codes: F13; H20; H30
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| state autonomy (H77) | effectiveness of export subsidization (F14) |
| policy coherence (E61) | effectiveness of export subsidization (F14) |
| bureaucratic discretion (D73) | effectiveness of export subsidization (F14) |
| state autonomy (H77) | bureaucratic discretion (D73) |
| policy coherence (E61) | bureaucratic discretion (D73) |
| state autonomy (H77) | insulated from organized private interests (L39) |
| policy coherence (E61) | stable and non-conflicting priorities (C62) |
| lack of commitment from leadership (D73) | ineffective outcomes (I12) |
| incoherent policy objectives (E61) | minimal impact (F69) |