Foreign informational lobbying can enhance tourism: Evidence from the Caribbean

There exist legal channels for informational lobbying of US policymakers by foreign principals. Foreign governments and private sector principals frequently and intensively use this institutional channel to lobby on trade and tourism issues. This paper empirically studies whether such lobbying effectively achieves its goal of trade promotion in the context of Caribbean tourism, and suggests the potential for using foreign lobbying as a vehicle for development. Panel data are used to explore and quantify the association between foreign lobbying by Caribbean principals and US tourist arrivals to Caribbean destinations. A variety of sensitivity analyses support the finding of a strong association. The policy implications are obvious and potentially important for developing countries.     

中国旅游业发展质量的实证研究——旅游业外贸竞争力之贸易实得指数的理论分析及测算

由于传统外贸竞争力评价指标自身存在的缺陷和旅游业统计方法的特殊性,在对显示性比较优势指数和贸易竞争优势指数进行批判继承的基础上,文章结合中国2020年建设成为世界旅游强国的目标,创建了贸易实得指数,使用投入产出表重新评价了2000-2009年中国旅游业的外贸竞争力,并与美国和澳大利亚两个国家进行横向比较,借以实证研究近十年来中国旅游业的发展质量状况。研究结果表明,在过去的十年里,中国旅游业的外贸竞争力呈下降趋势,旅游业发展质量不容乐观,要实现世界旅游强国的目标任重而道远。     

The role of importers and exporters in the determination of the U.S. tariff preferences granted to Latin America

This paper investigates the role played by domestic importers and foreign exporters in improving preferential access to the domestic market. To this end, the framework used in this paper extends the protection for sale analysis to explicitly model the role of domestic importers and foreign exporters in the determination of preferential trade treatment. The predictions of the model are tested using data on preferential trade between the United States and Latin American countries. The results suggest that Latin American exporters and US importers' lobbying efforts have a significant and important role in determining the extent of preferential access granted by the United States. More interestingly, these findings also show that U.S. importers capture a very substantial share of the rents generated by tariff preferences. These results therefore shed a pessimistic view on preferential trade schemes as a reliable source of gains for developing countries.     

The effect of the Canada‐US Free Trade Agreement on Canadian multilateral trade liberalization

In this paper show that the Canada‐US Free Trade Agreement (CUSFTA) tariff preferences have triggered a decline in Canadian external tariffs, explaining a two percentage point reduction in the average tariff between 1989 and 1998. Next, we found that industries that generate the least export rent to the US firms experienced deeper tariff cuts in Canada; this result provides evidence of cooperation in trade policies between the US and Canada. Finally, we estimate the effect of the CUSFTA on the intensity of industrial lobbying for trade policy in Canada and find no relationship between preferential trade liberalization and lobbying activity.     

To Ban or Not to Ban: Foreign Lobbying and Cross‐National Externalities

This paper studies the costs and benefits of foreign lobbying. We show how and when foreign lobbying can help internalize cross‐national externalities. We argue that this is an often overlooked benefit of foreign lobbying. We also study under what conditions a constitutional rule banning foreign lobbying is in the national interest of a country. A key factor in this calculus is whether the interests of foreign lobby groups and domestic unorganized groups coincide or not. We illustrate the logic with examples from trade policy and environmental regulation.     

Endogenous Free Trade Agreements and Foreign Lobbying

This paper assesses the political viability of free trade agreements (FTAs) in the presence of lobbying by organized foreign interest groups. The assessment is based on a model in which external tariffs and the decision to form an FTA are endogenously determined. The findings demonstrate that, in the presence of an organized lobby group in a prospective partner country, an FTA may initiate an increase in the level of protection against imports from third countries and impede trade with non‐member countries. Further, this study finds that a foreign lobby may encourage the local government to enter a welfare‐reducing trade‐diverting FTA. Finally, this paper shows that an FTA increases the lobbying power of the organized lobby groups of the member countries, which can potentially obstruct the viability of welfare‐improving multilateral trade liberalization.     

Regional Trade Agreements and Cross‐border Lobbying: Empirical Evidence from the Canada–US Free Trade Agreement Negotiations

This paper documents participation of special interest groups in negotiations of the Canada–US Free Trade Agreement. Using data on the tariff reduction schedules mandated by the agreement, it shows that industries represented by strong lobby groups were faced with more favorable tariff reduction paths in both countries: phase‐out periods were longer at home and shorter in the partner country. This result provides evidence on the involvement of industry lobbying in negotiation of regional trade agreements and suggests that countries negotiating trade agreements are responsive to the interests of lobbying groups from across the border. Both results provide important implications for the political economy theory of trade agreements.     

THE COMPLEMENTARITY BETWEEN ENDOGENOUS PROTECTION AND DIRECT FOREIGN INVESTMENT

This paper studies the endogenous relationship between direct foreign investgment (DFI) and trade restriction. A domestic labor union interested in both employment and wages bargains with a foreign firm and lobbies against foreign imports. By endogeneizing the wage rate and incorporating resource-using lobbying, we show that more DFI results in higher lobbying efforts and lower imports under fairly general conditions, i.e. a reversal of quid pro quo DFI. We also conduct comparative statics analysis on wages and lobbying efforts.     

行业协会的游说行为及其影响因素分析

根据对中国的全国性行业协会的调查,文章首先描述了全国性行业协会的游说态度和游说行为的现状,在此基础上,对影响行业协会游说行为的因素进行了分析。实证分析的结果表明,协会对游说的态度、协会成立的年限、协会的自主性和协会的代表性等因素对行业协会的游说行为具有显著的影响,而协会的规模与游说行为不存在显著的相关关系。     

Privatization and the Political Economy of Strategic Trade Policy

This article considers the interdependence between international financial markets, privatization, and strategic trade policies. We describe an economy where portfolio allocations are chosen by risk-averse agents who rationally forecast future trade policies. Assuming a government responsive to the policy preferences of voters, we show that ownership structure affects trade policy through the incentives for lobbying by private agents. Portfolios and trade policy are thus jointly determined in political-economic equilibrium. Privatization of state-owned industry exerts an important influence over the trade policies chosen by domestic and foreign governments by expanding the scope for individual diversification.     

INTERNATIONAL CAPITAL MOBILITY AND TRADE POLITICS: CAPITAL FLOWS, POLITICAL COALITIONS, AND LOBBYING

Conventional wisdom holds that increasing international capital mobility reduces incentives for firms to lobby for trade protection. This paper argues that the effects of increased international capital mobility on the lobbying incentives of firms depend critically upon levels of inter-industry mobility. General-equilibrium analysis reveals that if capital is highly industry-specific, greater international mobility among some types of specific capital may increase lobbying incentives for owners of other specific factors and thereby intensify industry-based rent-seeking in trade politics. Evidence on levels of inward and outward investment in US manufacturing industries between 1982 and 1996, and on industry lobbying activities, indicate that these effects may be quite strong.     

Interest Groups, Trade Liberalization, and Environmental Standards

In considering a country that imposes a minimum standard on an imported polluting good, which generates negative consumption externalities, we construct a common-agency model, in which a domestic environmental group and a foreign industrial lobby can influence the formation of the minimum standard by providing political contributions to the government. This paper investigates the effects of trade liberalization on the political equilibrium environmental standard, the pattern of trade, environmental disutility, and social welfare. We find that trade liberalization tightens the minimum standard, decreases imports of the polluting good, and reduces environmental disutilities. The importing country’s social welfare, however, does not necessarily increase with trade liberalization. The weaker the environmental group’s lobbying efficiency, or the stronger the foreign firm’s lobbying efficiency, the more likely it is that trade liberalization will enhance the importing country’s welfare.     

Revisiting the link between PAC contributions and lobbying expenditures

Data on campaign contributions of PACs (political action committees) in the US does not contain the PACs' issues of concern. Additionally, while recent US lobbying data details the issues of concern for an interest group, it does not detail the Congressional representatives lobbied by the interest group. Expanding the time-frame of earlier work, I confirm that PACs engaging in lobbying and campaign contributions account for the majority of such political money despite representing a small minority of all PACs. I show how this allows the construction of a novel dataset that decomposes representative-specific contributions across issues as well as issue-specific lobbying expenditures across representatives. This decomposition can qualitatively affect results regarding the relationship between political money and Congressional voting behavior on trade policy.     

LOBBYING UNDER ASYMMETRIC INFORMATION

We analyze an informational theory of lobbying in the context of strategic trade policy. A home firm competes with a foreign firm to export to a third country. The home policy-maker aims to improve the home firm's profit using an export subsidy. The optimal export subsidy depends on the demand conditions in the third country, which are unknown to the policy-maker. The home firm can convey this information to the policy-maker via costly lobbying. Surprisingly, the presence of lobbying costs can be advantageous for both: it makes the home firm's lobby effort credible and eases the policy-maker's information problem. We identify the conditions under which lobbying is beneficial on balance and the conditions under which it is harmful.     

National champions and globalization

Abstract .  In this paper, we offer an explanation why globalization (falling trade costs) may increase the government incentive to block foreign takeover of domestic firms and increase its incentive to allow mergers among national firms. This creation of 'national champions' occurs not only because the government may have a bias against foreign takeover, but also because consumer welfare gains associated with foreign acquisitions decrease with globalization. Endogenizing the government bias through lobbying efforts of the domestic firms, the paper shows that the bias does not need to be very strong before the government promotes domestic champions provided that barriers to trade are low.     

US Foreign Direct Investment in East Asia: Strategy and Policy Issues

East Asian trade and investment policies have attracted US investment into the region, but these policies should be fine-tuned for the region to compete effectively for US investment inflow and increase their global share of US foreign direct investment. The changes should consider the needs of the US investors and East Asia's own economic development. Bilateral free trade agreements with the US are the likely channel for these changes, but the question is whether East Asia is ready for a comprehensive and deep liberalization. East Asia should work toward a regional investment policy framework to facilitate and expand the regional production network developed by the US foreign direct investment.     

Endogenous trade policy in general equilibrium: An interaction of redistribution rule,trade openness,and labor market condition

Using a general equilibrium framework, the paper derives trade policy endogenously for a small country. It shows that, contrary to the existing literature, a lobbying industry is not guaranteed trade protection; it may even face trade taxes. Besides lobbying, trade policy depends on other factors such as the trade revenue distribution rule, income distribution across groups, trade openness, factor substitutability in production, industry employment size, and labor market flexibility. The paper also shows that the observed phenomenon of government preference for import tariffs over export subsidies—a long overdue puzzle—is an inherent outcome of lobbying equilibrium. It also shows that trade policies such as import tariffs and export taxes that have the same impact on economic market—Lerner symmetry (1936)—are driven by the same forces in the political market.     

Trade,Transboundary Pollution,and Foreign Lobbying

In this paper, we explore the use of trade policy in addressing transboundary stock pollution problems such as acid rain and water pollution. We show that a tariff determined by the current level of accumulated pollution can induce the time path of emissions optimal for the downstream (polluted) country. But if the upstream (polluting) country can lobby the downstream government to impose lower tariffs, distortions brought by corruption and foreign lobbying lead to a rise in the upstream country’s social welfare, and to a decrease in social welfare in the downstream country. Thus, the usefulness of trade policy as a tool for encouraging cooperation and internalizing transboundary externalities depends critically on the degree of governments’ susceptibility to foreign political influence.     

The impact of patent protection on US pharmaceutical exports to developing countries

This article provides evidence that patent protection can have a positive effect on trade, by analysing the impact of the implementation of intellectual property rights (IPR) in developing countries on the US exports of pharmaceutical products, following intense lobbying efforts from the US pharmaceutical industry to have the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement included in the creation of the World Trade Organization (WTO). A gravity model using panel data from 1995 to 2010 suggests that the implementation of minimum standards of patent protection has increased US exports of pharmaceuticals to 108 nonadvanced countries.     

Customs Union or Free Trade Area? The Role of Political Asymmetries

When trade policy is determined endogenously by lobbying, it matters whether countries are arranged into a customs union or a free trade area. This paper compares the two regimes when the member governments are asymmetric in their susceptibilities to lobbying and in their bargaining power within a customs union. In the model, a customs union never leads to lower tariffs for both countries, whereas it can lead to higher tariffs for both.