Firm Productivity Differences from Factor Markets: New Evidence from China

By Wenya Cheng (University of Glasgow) and John Morrow (Birkbeck, University of London)

Although firms may face radically different production conditions, this dimension of firm heterogeneity is often overlooked. A number of studies document large and persistent differences in productivity across both countries and firms.… read more ...

Foreign Investment Boosts Sophistication of Domestic Manufacturing: New Evidence from Turkey

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.… read more ...

Self-Enforcing Trade Agreements and Lobbying

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 severity of the chosen punishments.… read more ...

Global Tariff Negotiations as a Stumbling Bloc to Global Free Trade?

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.… read more ...

The GATT/WTO’s Special and Differential Treatment of Developing Countries

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).… read more ...

State Capacity and The Unintended Consequences of Military Intervention

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.… read more ...

Economics of Populism

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 political and economic climate of populism on both the right and the left of the political spectrum.… read more ...

The trade-off between tax revenues and trade liberalization

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 trade liberalization, especially from a fiscal standpoint, it is puzzling that developing countries remain relatively protectionist.  A new branch of the literature has begun to shed light on this issue.… read more ...