Lobbying incentives and the pattern of protection in rich and poor countries

Abstract

During the past decade or so, an increasing number of economists have directed their attention to explaining why countries adopt protectionist trade policies rather than the economic welfare-maximizing regime of free trade. There is also a growing body of literature by empirical analysts that seeks to explain the interindustry pattern of protection within countries. However, less attention has been given to explaining the intersectoral pattern of protection across countries. In particular, why is it that price and trade policies in poor countries typically protect the infant industrial sector at the expense of agriculture while the policy regime in rich countries typically favors farmers relative to industrialists? This pattern seems paradoxical, since the distribution of aggregate votes and wealth has the opposite sectoral bias. Show more