Institutions Trade & Economic Development
By Beata Javorcik (University of Oxford), Alessia Lo Turco, (Marche Polytechnic University), Daniela Maggioni (University of Catania) Recently, there has been a renewal of interest in industrial policy across the world. Advanced economies promise to use industrial policy to revive their declining manufacturing, while emerging markets hope that industrial policies will help them upgrade their […]
By Kristy Buzard (Syracuse University) Going back to the mid-1980s, the repeated prisoner’s dilemma has been used to model the absence of strong external enforcement mechanisms for trade agreements.[1] Cooperation is enforced by promises of future punishment for any deviation from the agreement, and the amount of cooperation that can be achieved depends on the […]
By James Lake (Southern Methodist University) and Santanu Roy (Southern Methodist University) The principle of non-discrimination lies at the heart of the WTO. GATT Article I mandates that, for a given product, a country cannot set different tariffs on different trading partners. Indeed, GATT Article I has provided the bedrock for the various rounds of […]
By Ben Zissimos (University of Exeter Business School) In a landmark paper, Daron Acemoglu and James Robinson argue that a key purpose of democratization is to resolve a commitment problem faced by a ruling elite under the threat of revolution.[1] Their motivation focuses on 19th and early 20th Century Europe, during which time a number […]
By Ben Zissimos (University of Exeter Business School) Special and differential treatment (SDT) is effectively a set of exemptions from MFN extended to developing country members of the General Agreement on Tariffs and Trade (GATT)/World Trade Organization (WTO).[1] (MFN (most favored nation) treatment is the principle that any terms agreed between two parties to a […]
State capacity determines the power of a state to raise revenues, to enforce contracts, to support markets through regulation, and to establish a ‘monopoly of violence’. In fact, the extent of state capacity is perhaps the fundamental difference between developed and developing countries: developed countries have significantly more of it than developing countries do. But, because state […]
Social scientists regard globalization and technological progress as major contributors to the ongoing increase in job and income polarization in the United States and Europe. This increased inequality is thought to have reduced standards of living for the median voter in both regions. Against this backdrop, the 2007-2008 financial crisis seems to have created a […]
Standard theory predicts that, in the long term, trade liberalization leads to an increase in allocative efficiency and hence an increase of fiscal revenues. This prediction is based on the idea that overall economic surplus determines the size of the tax base and an improvement in allocative efficiency increases surplus. Given this attractive feature of […]
The rise of inequality in recent decades has led to the polarization of politics and social instability across developed and developing nations. Explaining the origins of the increase in inequality has become a subject of intense debate among scholars. A commonly accepted hypothesis is that new technologies are complementary to high skilled labor and at the same time tend […]
The Brexit vote on June 23rd 2016 highlights the basic fact that the costs and benefits of economic and political integration are unequally distributed across different social groups within a region. Because integration has winners and losers, when decisions on sovereignty are taken through majority voting it is possible that a majority against integration emerges even if it is […]