How Costly is Protectionism?

Feenstra, Robert C.

doi:10.1257/jep.6.3.159

Cited by 100 publications

(45 citation statements)

References 15 publications

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“…In the numerous cases where large countries are imposing such quantitative trade barriers, there are also terms of trade effects to consider (as there are also with a tariff). They can lead to efficiency losses for the exporting countries that more than offset the quota rent transfer --as found in several of the US studies of VERs surveyed by Feenstra (1992). They also lead to extra losses (a) if the quotas are volume based because that measure encourages the exporting of more-processed or higher -quality products within the product group for each quota, (b) if the quotas are allocated (rather than auctione d) but not to the lowest-cost exporting countries, (c) if the licences to fill an exporting country's quota are allocated (rather than auctioned) but not to the lowest-cost firms in that country, (d) if the quota leads to additional lobbying, in this case for an allocation of the quota, that erodes the rent transfer, and (e) if the VER encourages inefficient foreign direct investment (FDI) in the importing country in lieu of exporting the product to that country, or FDI in another (highercost) exporting country.…”

Section: Measuring the Cost Of Protectionmentioning

confidence: 99%

Setting the Trade Policy Agenda: What Roles for Economists?

Anderson

2005

SSRN Journal

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Economists have influenced the trade policy agenda for establishing multilateral trade rules, disciplines and procedures and for negotiating most -favored nation and preferential reductions in trade barriers and subsidies, in addition to affecting the agenda for unilateral policy reform. These roles are considered in turn, before focusing on the economists' contribution though quantifying the extent and effects of existing trade distortions and alternative reform initiatives. Many trade distortions remain, however, so the paper then looks at where trade economists' efforts in agenda-setting need to be focused in the years ahead.Keywords: trade rules, trade policy reform, cost of protection, empirical modelling of effects of trade policies JEL codes: F13, Q17iii NON-TECHNICAL SUMMARYWhat contribution has the economics profession made in setting the agenda for trade policy formation and its reform? Cynics would say little, on the grounds that almost every country still imposes trade barriers even though economists have articulated the virtues of free trade for more than two centuries. A shorter time horizon gives a more positive picture though, with substantial reductions in tariffs o n most manufactured goods by OECD countries following their hikes in the 1930s, and the lowering of trade barriers by many developing countries from the 1980s. This paper examines that post -war period, and then looks at the scope for strengthening the role s of trade economists.Economists since the 1930s have contributed to the trade agenda at the multilateral, regional and national levels. Their constitutional contributions to the multilateral rules and their exceptions include a tolerance for regional and other preferential trading arrangements. Most of the action is at the national level though, including in helping governments decide how to spread their resources between unilateral trade-policy setting and engagement in preferential and multilateral negotiations for better rules and improved access to markets. Underlying all of the trade liberalization efforts has been the economists' quantification of the extent and effects of trade distortions and reform initiatives, both before and after reforms have been implemented. An extensive examination of that contribution sets the scene for looking at where trade economists' efforts should be focused in the years ahead. They include countering the wave of anti-globalization sentiment, improving quantitative anal ysis of the effects of trade reforms, and contributing more to the WTO's dispute settlement procedures. The paper concludes by suggesting more attention needs to be given to the distributional effects of policy reform, so as to better understand the resistance to it and help design measures to reduce those forces. It would help too if individual policy analysts built stronger relationships with policy advisors and their masters.In terms of the more-immediate goal of influencing the Doha Development Agenda, the attention of analysts needs to focus on better modelling of...

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Section: Measuring the Cost Of Protectionmentioning

confidence: 99%

Setting the Trade Policy Agenda: What Roles for Economists?

Anderson

2005

SSRN Journal

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“…2 A first attempt was made by Feenstra (1992). He shows in a numerical example how trade barriers can affect the number of available products and reduce consumer welfare.…”

Section: Introductionmentioning

confidence: 99%

“…He shows in a numerical example how trade barriers can affect the number of available products and reduce consumer welfare. Following the idea of Feenstra (1992), Romer (1994) calibrates a model with fixed export costs and finds that a substantial reduction in trade barriers will lead to more exported varieties, resulting in an increase of GDP of up to 20%. Using a similar approach Klenow and Rodríguez-Clare (1997) construct and calibrate a general equilibrium model with detailed Costa Rican trade data to quantify the impact of trade restrictions on welfare.…”

Section: Introductionmentioning

confidence: 99%

The gains from variety in the European Union

Mohler

Seitz

2012

Rev World Econ

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Over the last decade, European Union members have experienced a dramatic increase in imports. This increase was accompanied by a strong growth in the number of imported goods and trading partners, indicating positive welfare gains for consumers via an extended set of consumption possibilities, as pointed out in the "New Trade Theory". In this paper, we apply the methodology developed by Feenstra (1994) and to estimate structurally the gains from imported variety for the 27 countries of the European Union using highly disaggregated trade data at the HTS-8 level from Eurostat for the period of 1999 to 2008. Our results show that, within the European Union, especially "newer" and smaller member states exhibit high gains from newly imported varieties. Furthermore, we find that the vast majority of the gains from variety for consumers stem from intra-European Union trade.

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“…The importance of these gains has been realized by authors like Harris (1984), Feenstra (1992) or Romer (1994), but the most influential work regarding the empirics in this field is found in Feenstra (1994b). In his seminal contribution, 1 I would like to note here that other authors have quantified the value of new varieties using domestic micro data: Examples are Hausman (1997aHausman ( , 1997bHausman ( , and 1999 or Petrin (2002).…”

Section: Introductionmentioning

confidence: 99%

Variety Gains from Trade in Switzerland

Mohler

2011

Swiss J Economics Statistics

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Summary Since the seminal work of Krugman (1979), variety gains from trade are recognized as an important channel of welfare gains. In this paper, the gains from variety are estimated for Switzerland. It is found that despite the openness of the Swiss economy these gains are not substantial and smaller than in other countries; specifically compared to the gains in the United States. It is shown that the reasons for this result are twofold: First, the Swiss imports are shown not to be as differentiated as their U.S. counterparts; consequently, new varieties do not provide the same value to consumers. Second, variety growth of imports in Switzerland is much smaller compared to variety growth in larger countries. It is furthermore shown that this latter effect is quantitatively more important than the first.

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How Costly is Protectionism?

Cited by 100 publications

References 15 publications

Setting the Trade Policy Agenda: What Roles for Economists?

Setting the Trade Policy Agenda: What Roles for Economists?

The gains from variety in the European Union

Variety Gains from Trade in Switzerland

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