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Protectionism, how stupid is this? The causal effect of free trade for the world’s poorest countries: Evidence from a quasi-experiment in Switzerland

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  • Ritzel, Christian
  • Kohler, Andreas

Abstract

Against the background of a possible revival of protectionism, we study a quasi-experimental situation in Switzerland to estimate the causal effect of free market access on agro-food exports of least-developed countries. We show that due to this setup our study is not suffering from selection and attrition issues plaguing existing studies. To estimate the causal effect of a unilateral trade liberalization we implement a difference-in-differences model based on synthetic control methods. We find that on average agro-food exports of least-developed countries to Switzerland were about 80% higher due to the introduction of free market access. In other words, if Switzerland had followed the path of protectionism, least-developed countries’ agro-food exports would have been almost half of what they are under free trade.

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  • Ritzel, Christian & Kohler, Andreas, 2017. "Protectionism, how stupid is this? The causal effect of free trade for the world’s poorest countries: Evidence from a quasi-experiment in Switzerland," Journal of Policy Modeling, Elsevier, vol. 39(6), pages 1007-1018.
    • Handle: RePEc:eee:jpolmo:v:39:y:2017:i:6:p:1007-1018
    DOI: 10.1016/j.jpolmod.2017.05.002
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    Cited by:

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    2. Christian Ritzel & Andreas Kohler & Stefan Mann, 2018. "Good governance and preferential trade: evidence from the Swiss generalized system of preferences," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 45(2), pages 259-274, February.
    3. Esteban Colla‐De‐Robertis & Rafael Garduno Rivera, 2021. "The effect of a free trade agreement with the United States on member countries' per capita GDP: A synthetic control analysis," Regional Science Policy & Practice, Wiley Blackwell, vol. 13(4), pages 1129-1145, August.
    4. Sosso Feindouno & Michael Goujon, 2019. "Human Assets Index: Insights from a Retrospective Series Analysis," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 141(3), pages 959-984, February.
    5. Thorbecke, Willem & Kato, Atsuyuki, 2018. "Exchange rates and the Swiss economy," Journal of Policy Modeling, Elsevier, vol. 40(6), pages 1182-1199.
    6. Samuel Verevis & Murat Üngör, 2021. "What has New Zealand gained from The FTA with China?: Two counterfactual analyses†," Scottish Journal of Political Economy, Scottish Economic Society, vol. 68(1), pages 20-50, February.

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    More about this item

    Keywords

    Causal effect; Free trade; Developing countries; Agro-food exports; Preferential trade;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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