The Theory of Political Tariff Protection for Agricultural Sector in Developing Countries

Subject Areas : Environmental policy and management

Yaser Feizabadi ¹

1 - Department of Agricultural Economics, Qaemshahr Branch, Islamic Azad University, Qaemshahr, Iran

Received: 2013-05-01 Accepted : 2013-05-23 Published : 2014-03-01

Keywords: agricultural sector, Developing Countries and Tariff Protection,

Abstract :

This paper aims to analyze tariff protection policies in the agricultural sector of developing countries. The agricultural tariff structure in developing countries is characterized by: i) high average tariffs, ii) the existence of tariff escalation, iii) dispersion of nominal tariffs across tariff lines, and iv) a wide gap between average nominal tariffs and import-weighted average tariffs. Consequently, some features can be extracted that are consistent with the observed patterns of tariff protection in developing countries: i) escalation of nominal tariff rates with the degree of processing, ii) higher average tariffs in the agricultural sector compared to agriculture in developed countries, and iii) higher non-agricultural than agricultural tariff protection. Here the Theory of Political Tariff Protection for Agricultural Sector in developing countries is described. This theory allows us to identify two sets of products. Agricultural products for which tariffs are higher than their political fitted values, therefore, tariff cuts should occur in a long period of time and for which tariffs are higher than their political fitted values therefore tariff reductions would not be politically costly.

References:

1- Anderson, K. (1980). The political market forgovernment assistance to Australian ManufacturingIndustries, the Economic Record, 56, 132-144.

2- Belloc, M. & Guerrieri, P. (2008). Special interestgroups and trade policy in the EU, Open EconomiesReview, 19(4), 457-78. [DOI via Crossref]

3- Bombardini, M. (2005). Firm heterogeneity andlobby participation, mimeo, University of BritishColumbia, Vancouver. [PMC Free Fulltext]

4- Cadot, O. (1997). Lobbying and the structure ofprotection. CEPR discussion paper.

5- Finger, M. & Harrison, A. (1994). The MFA paradox:More Protection and More Trade? mimeo,The World Bank, Washington, DC. [PMC Free Fulltext]

6- Gawande, K. & Krishna, P. (2003). The politicaleconomy of trade policy: Empirical approaches, pp.213-250 in E.K. Choi and J. Harrigan (eds.),Handbook of International Trade, Oxford: BlackwellPublishing. [DOI via Crossref]

7- Gawande, K., Sanguinetti, P. & Bohara, A.K.(2005). Exclusions for Sale: Evidence on the Grossman-Helpman Model of free trade agreements, NAFTA-MERCOSUR Working Paper No. 4, Universityof New Mexico.

8- Grossman,G. & Helpman, E. (1994). Protectionfor sale, American Economic Review 84, 833-850.

9- Levy, P.I. (1993 a). Lobbying and internationalcooperation in tariff setting, Unpublished paper,Stanford University.

10- Levy, P.I. (1993 b). A political economic of freetrade agreement, Unpublished.

11- Madani, D. & Olarreaga, M. (2002). Politicallyoptimal tariffs: An application to Egypt, World BankPolicy Research Working Paper 2882,

12- Marvel, H. & Ray, J. (1983). The kennedyround: Evidence on the regulation of trade in theUS, American Economic Review, 73, 190-197.

13- Marvel, H. & Ray, J. (1983). Intra-industryTrade: Sources and effects on protection, Journal ofPolitical Economy, 95, 1278-1290.

14- Mitra, D., Thomakos, D.D. & Ulubasoglu, M.(2006). Can we obtain realistic parameter estimatesfor the Protection for Sale Model? Canadian Journalof Economics, 39(1), 187–210. [DOI via Crossref]

15- Ray, E. (1987). The impact of special interestson preferential trade concessions by the US, Reviewof Economics and Statistics, 69, 187-195. [DOI via Crossref]

16- Rodrik, D. (1995). Political economy of tradepolicy in: G. Grossman and K.roggof.eds., Handbookof international economics III, North Holland, Amasterdam.

17- Swinnen, Johan, F.M. (2009). Political economyof agricultural distortions: The Literature to Date,Empirical analyses: Testing the Grossman-HelpmanModel.

18- Trefler, D. (1993). Trade liberalization and thetheory of endogenous protection, Journal of politicalEconomy, 101, 138-160. [DOI via Crossref]