Working Paper: NBER ID: w9239
Authors: Pushan Dutt; Devashish Mitra
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.
Keywords: No keywords provided
JEL Codes: F10; F11; F13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| left-wing governments (P26) | protectionist trade policies in capital-abundant economies (O24) |
| left-wing governments (P26) | pro-trade policies in labor-abundant economies (F16) |
| increase in left-wing ideology (P39) | increase in trade barriers in capital-abundant economies (F14) |
| increase in left-wing ideology (P39) | decrease in trade barriers in labor-abundant economies (F66) |
| political orientation of the government (P26) | trade policy outcomes (F13) |
| interaction between ideology and capital-labor ratios (P16) | relationship between political ideology and trade policy (F13) |