The Determinants of Individual Trade Policy Preferences: International Survey Evidence

What determines trade policy? While this may seem to be mainly a question for political scientists, it is of increasing concern to international trade theorists, faced with the obvious disjunction between the free trade prescriptions of standard trade models and the protectionist policies pursued by so many governments. ¹ The intellectual stakes for economists have increased further with the advent of endogenous growth models, which predict that policies can have important, long-run growth effects, as opposed to the fairly trivial deadweight losses implied by static constant returns models. Clearly it is not sufficient to take these policies as exogenous and examine their implications. To understand growth, the theory seems to be telling us, we need to understand why some countries pursue appropriate policies and others inappropriate ones.

When faced with such questions, the instinct of economists is to eschew state-centered or cognitive theories and to reach for the rational choice approach: politicians supply policies; voters and interest groups demand them; the institutional environment helps determine the ways in which these demands and supplies interact with each other, and thus the eventual equilibrium. In these models, a key consideration is the determination of individual voter preferences, which in turn depends on the structure of the economy in question. In an environment in which factors are stuck in particular sectors, as in the specific factors model, factors have a direct stake in those particular sectors. Thus, management and labor in each sector will agree with each other that their sector deserves protection (if it is an import-competing sector), or that free trade is the best policy (if it is an exporting sector). On the other hand, if factors are mobile between sectors, as in the Heckscher-Ohlin model, then unskilled workers everywhere will have the same interest (since they all earn the same wage), as will skilled workers, as well as capital and all other relevant, mobile factors of production. In this case, abundant factors will favor free trade, and scarce factors will favor protection. ² Classic economic contributions to the literature, such as Findlay and Wellisz; Mayer; Magee, Brock, and Young; and Grossman and Helpman all assume such a rational choice world, with some adopting a specific factors specification and others a Heckscher-Ohlin one. ³

On the other hand there are powerful empirical reasons for believing that interests alone may not provide a complete explanation for the evolution of trade policy. Ideas (or ideology) may matter too. Sometimes the ideology is socialist, as in the case of COMECON, while the case of late nineteenth century Britain arguably provides an example of the power of liberal ideology. ⁴ In this paper we take seriously a third possibility, that a preference for economic protectionism among voters is a function of strong feelings of national identity and an associated set of patriotic and nationalist attitudes that include pride in country, sense of national superiority, and, at the extreme, antagonistic attitudes toward those who are not part of the nation. Of course nationalist ideology may have its origins in a conjuncture between identity and group interests, and particularly in a conjuncture between identity and perceptions of inequality. The point here, however, is that whatever their origins, nationalist attitudes are likely to have a certain autonomy and may exercise an independent influence on the way in which individuals react to the opening up of trade and to other globalization issues. ⁵

These competing explanations have radically different policy implications. If support for economic protectionism is a function of the material interests of individuals, it can in principle be dealt with by offering side payments that compensate for the losses that result from liberalization. For example, in a specific factors framework workers who have been displaced from declining industries can be given help in relocating to other sectors...