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Taking Trade Policy Seriously: Export Subsidization as a Case Study in Policy Effectiveness

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  • 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 Korea, Brazil, Turkey, India, Kenya, and Bolivia 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.

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  • Dani Rodrik, 1993. "Taking Trade Policy Seriously: Export Subsidization as a Case Study in Policy Effectiveness," NBER Working Papers 4567, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:4567
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    2. Bernard M. Hoekman & Keith E. Maskus & Kamal Saggi, 2023. "Transfer of Technology to Developing Countries: Unilateral and Multilateral Policy Options," World Scientific Book Chapters, in: Kamal Saggi (ed.), Technology Transfer, Foreign Direct Investment, and the Protection of Intellectual Property in the Global Economy, chapter 5, pages 127-142, World Scientific Publishing Co. Pte. Ltd..
    3. Staiger, Robert W., 1995. "International rules and institutions for trade policy," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 29, pages 1495-1551, Elsevier.
    4. Brander, James A., 1995. "Strategic trade policy," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 27, pages 1395-1455, Elsevier.
    5. Keuschnigg, Christian & Kohler, Wilhelm, 1996. "Commercial policy and dynamic adjustment under monopolistic competition," Journal of International Economics, Elsevier, vol. 40(3-4), pages 373-409, May.
    6. Alexandr Knobel, 2010. "Factors of important Tariff Information," Research Paper Series, Gaidar Institute for Economic Policy, issue 143P.
    7. Rodrik, Dani, 2005. "Growth Strategies," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 14, pages 967-1014, Elsevier.
    8. Bernard Hoekman, 2004. "Policies Facilitating Firm Adjustment to Globalization," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 20(3), pages 457-473, Autumn.
    9. Gabriel Porcile & Gilberto Tadeu Lima, 2010. "Real exchange rate and elasticity of labour supply in a balance-of-payments-constrained macrodynamics," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 34(6), pages 1019-1039.
    10. Mariano Tommasi, 2003. "Crises, institutions politiques et réformes politiques : le bon, le mauvais et l'affreux," Revue d’économie du développement, De Boeck Université, vol. 11(2), pages 49-81.
    11. Gunseli Berik, 2006. "Growth with Gender Inequity: Another Look at East Asian Development," Working Paper Series, Department of Economics, University of Utah 2006_03, University of Utah, Department of Economics.
    12. Sacchidananda Mukherjee & Debashis Chakraborty & Julien Chaisse, 2014. "Influence of Subsidies on Exports empirical estimates,policy evidences and regulatory prospects," Working Papers 1422, Indian Institute of Foreign Trade.
    13. Helmers, Christian & Trofimenko, Natalia, 2009. "Export subsidies in a heterogeneous firms framework," Kiel Working Papers 1476, Kiel Institute for the World Economy (IfW Kiel).
    14. Richard G. Lipsey, 2013. "Some contentious issues in theory and policy in memory of Mark Blaug," Chapters, in: Marcel Boumans & Matthias Klaes (ed.), Mark Blaug: Rebel with Many Causes, chapter 6, pages 31-62, Edward Elgar Publishing.
    15. Judith Streak, 1997. "The counter-counterrevolution in development theory on the role of the state in development: Inferences for South Africa?," Development Southern Africa, Taylor & Francis Journals, vol. 14(3), pages 307-325.

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    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

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