The political economy of trade, aid and foreign investment policies / editors, Devashish Mitra, Arvind Panagariya.

Includes bibliographical references and index.

Cover -- Contents -- Foreword -- Preface -- Contributors -- Chapter 1. Introduction -- 1.1 Part I -- 1.2 Part II -- 1.3 Part III -- 1.4 Part IV -- References -- Part I: Making of Trade Policy: Theory -- Chapter 2. Trade Policy Making by an Assembly -- 2.1 Introduction -- 2.2 A specific-factors model -- 2.3 A Mayer-Heckscher-Ohlin Model -- 2.4 The electoral college -- 2.5 Conclusions and open questions -- Acknowledgements -- References -- Chapter 3. Should Policy Makers be Concerned About Adjustment Costs? -- 3.1 Introduction -- 3.2 The model -- 3.3 Aggregate adjustment costs -- 3.4 Adjustment costs and labor market flexibility -- 3.5 Conclusion -- Acknowledgements -- Appendix A -- Appendix B -- Appendix C -- References -- Chapter 4. Non-Tariff Barriers as a Test of Political Economy Theories -- 4.1 Introduction -- 4.2 Developing testable implications of the theory -- 4.3 Empirical evidence -- 4.4 Alternative explanations -- 4.5 Conclusion -- Acknowledgements -- References -- Chapter 5. The Peculiar Political Economy of NAFTA: Complexity, Uncertainty and Footloose Policy Preferences -- 5.1 The fact: footloose aggregate preferences on NAFTA -- 5.2 Policy complexity, social learning and footloose preferences -- 5.3 An illustrative model -- 5.4 Conclusion: on economists as participants in the politics of trade policy -- Acknowledgements -- References -- Part II: Making of Trade Policy: Empirical Analysis -- Chapter 6. Interest and Ideology in the 1988 Omnibus Trade Act: A Bayesian Multivariate Probit Analysis -- 6.1 Introduction -- 6.2 Background: the Trade Omnibus Act -- 6.3 Analysis of the multivariate probit model -- 6.4 Theory and measurement -- 6.5 Data -- 6.6 Empirical analysis -- 6.7 Model comparisons: Ideology versus interest -- 6.8 Conclusion -- Acknowledgements -- Appendix A: Bayesian analysis of the multivariate probit model -- References -- Chapter 7. Industry and Factor Linkages Between Lobby Groups -- 7.1 Introduction -- 7.2 Theory -- 7.3 Empirical analysis -- 7.4 Conclusion -- References -- Chapter 8. Sweetening the Pot: How American Sugar Buys Protection -- 8.1 Introduction -- 8.2 The US sugar program -- 8.3 Consequences of the program -- 8.4 Sugar interest groups' contributions -- 8.5 Determinants of sugar's campaign contributions -- 8.6 Marginal effects of different attributes on the probability of getting money and the amount of money received by incumbent senators -- 8.7 Concluding remarks -- Acknowledgements -- References -- Part III: Inter-Country Interactions -- Chapter 9. Unilateralism in Trade Policy: A Survey of Alternative Political-Economy Approaches -- 9.1 Introduction -- 9.2 Models of reciprocated unilateralism -- 9.3 Models of endogenous unilateralism -- 9.4 Concluding remarks: the current state of the literature and issues for future research -- References -- Chapter 10. Trade Creation and Residual Quota Protection in a Free Trade Area.

While considerable progress has been made in analyzing the formulation of international economic policies, the existing literature remains deficient in several respects. First, the existing models take a relatively simplistic view of the political-economy environment. For example, in contrast to the observed reality, a large majority of the models view the government as a monolithic entity. Second, there is only limited recognition of the political-economy interactions between interest groups across national borders. Third, dynamic factors governing trade policy formulation have been essential.

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