Trade Barriers and Trade Flows Across Countries and Industries

Abstract

We use disaggregated data on trade flows, production, and trade barriers for 41 countries in 1988 to examine the political and economic determinants of nontariff barriers, as well as the impact of protection (both tariff and nontariff) on trade flows. We use an econometric framework that allows for the simultaneous determination of trade barriers and trade flows. Our results are consistent with political-economy theories of the determinants of protection: even after accounting for industry- and country-specific factors, nations tend to protect industries that are weak, in decline, politically important, or threatened by import competition, but provide less protection to industries in which exports are important.

JEL Classification: F14