Natural Barriers and Policy Barriers / Yang Jiao, Shang-Jin Wei.

Format:

Book

Author/Creator:

Jiao, Yang.

Contributor:

National Bureau of Economic Research.

Wei, Shang-Jin.

Series:

Working Paper Series (National Bureau of Economic Research) no. w28171.

NBER working paper series no. w28171

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2020.

Summary:

This paper investigates whether "natural" trade barriers of a country due to geography and other factors outside the country's control stimulate more or less policy barriers such as tariffs. Our theory predicts that the politician's relative weight on private benefits over social welfare in a "protection-for-sale" setup depends on these "natural" features. The key mechanism is that a society's willingness to invest in improving institutions that constrain rent-seeking behavior is influenced by the natural barriers. Two types of empirical evidence support the theoretical predictions. First, "natural" barriers beget policy barriers - countries with more "natural" barriers tend to have higher tariffs and more NTBs. Second, liberalization begets liberalization - in response to unilateral trade reforms in China in the early 2000s, those other countries that benefit more from the Chinese liberalization also undertake more liberalization of their own.

Notes:

Print version record

December 2020.