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55
trade liberalization and the selection by government of the RTA trade policy to meet
demand for liberalization. In summary, Mattli is justified in his assessment of
economic models primarily because economists are asking a different research
question. Rather than examining the decision to adopt an RTA, economics seek to
explain the suboptimal outcome.
More recently, political economy models have evolved to examine the
variation in factor mobility over time. Giovanni Maggi and Andres Rodriguez-Clare
(2007) present a political economy model that demonstrates how capital mobility in
the long run influences trade agreement outcomes. Import competing sectors
exhibiting greater capital mobility are expected to experience greater liberalization
compared to import competing sectors with less mobile capital. In sectors with less
mobile capital, trade liberalization is expected to produce losses in the short run due
to an increase in foreign competition. The protection that persists for agriculture
serves as an example; agriculture uses land intensively. Land is the classic example
of an immobile resource. Accordingly, it is expected that sectors deriving income
from the intensive use of land are likely to lobby against liberalization.
Maggi and Rodriguez-Clare (2007) refer to a domestic-commitment problem
resulting from the expectation of protection stimulating disproportionate investment
in an industry prior to the extraction of the rent by government during negotiations
with the industry lobbyists. The government presumably extracts a smaller rent due
to the reduction in the expected profits of firms resulting from increased domestic
competition, which in turn reduces the share of market and the expected profit for
Object Description
| Title | Riding the wave: an interdisciplinary approach to understanding the popularity of RTA notifications to the GATT/WTO |
| Author | McClough, David Andrew |
| Author email | mcclough@usc.edu; dmcclou@bgsu.edu |
| Degree | Doctor of Philosophy |
| Document type | Dissertation |
| Degree program | Political Economy & Public Policy |
| School | College of Letters, Arts and Sciences |
| Date defended/completed | 2008-08-07 |
| Date submitted | 2008 |
| Restricted until | Unrestricted |
| Date published | 2008-10-18 |
| Advisor (committee chair) | Katada, Saori N. |
| Advisor (committee member) |
Nugent, Jeffrey B. Cartier, Carolyn |
| Abstract | The proliferation of Regional Trade Agreements (RTAs) notified to the GATT/WTO since the early 1980s deviates from the long-term trend and reflects participation of nearly every member of the United Nations. This dissertation seeks to explain the current wave of RTA notifications by supplementing the economic model of supply and demand with diffusion theory. Application of the supply and demand model is useful in distinguishing between changes in demand and changes insupply of RTAs. This distinction is seldom emphasized in the current literature examining RTAs. Recent applications of diffusion theory in the discipline of international relations offer a unique opportunity to include a dynamic force in the static analysis of the supply and demand model. Empirical analysis assesses the fit of the RTA diffusion pattern by comparing the RTA diffusion pattern to a cumulative standard normal distribution. The analysis indicates that the diffusion pattern of RTAs resembles the diffusion of an innovation through a social system.; The implication of this finding is that the adoption of an RTA as trade policy is not made independently of the decision by other states. Indeed, the analysis suggests interdependency between states. Further empirical analysis explores economic and political variables that may explain the decision to adopt the RTA as trade policy. The empirical analysis is unique in that survival analysis is utilized to assess the variation in duration to adopt an initial RTA since the early 1980s. A central discovery is that regional designation explains the variation in duration to adopt an initial RTA. Multiple regression analysis confirms the results generated using survival analysis and support the assertion that the proliferation of RTAs likely reflects changes in both the demand for RTAs and the supply of RTAs. This dissertation concludes by considering implications for the WTO resulting from the increase in RTA notifications. |
| Keyword | trade agreements |
| Coverage date | after 1980 |
| Language | English |
| Part of collection | University of Southern California dissertations and theses |
| Publisher (of the original version) | University of Southern California |
| Place of publication (of the original version) | Los Angeles, California |
| Publisher (of the digital version) | University of Southern California. Libraries |
| Provenance | Electronically uploaded by the author |
| Type | texts |
| Legacy record ID | usctheses-m1675 |
| Contributing entity | University of Southern California |
| Rights | McClough, David Andrew |
| Repository name | Libraries, University of Southern California |
| Repository address | Los Angeles, California |
| Repository email | cisadmin@lib.usc.edu |
| Filename | etd-McClough-2338 |
| Archival file | uscthesesreloadpub_Volume32/etd-McClough-2338.pdf |
Description
| Title | Page 64 |
| Contributing entity | University of Southern California |
| Repository email | cisadmin@lib.usc.edu |
| Full text | 55 trade liberalization and the selection by government of the RTA trade policy to meet demand for liberalization. In summary, Mattli is justified in his assessment of economic models primarily because economists are asking a different research question. Rather than examining the decision to adopt an RTA, economics seek to explain the suboptimal outcome. More recently, political economy models have evolved to examine the variation in factor mobility over time. Giovanni Maggi and Andres Rodriguez-Clare (2007) present a political economy model that demonstrates how capital mobility in the long run influences trade agreement outcomes. Import competing sectors exhibiting greater capital mobility are expected to experience greater liberalization compared to import competing sectors with less mobile capital. In sectors with less mobile capital, trade liberalization is expected to produce losses in the short run due to an increase in foreign competition. The protection that persists for agriculture serves as an example; agriculture uses land intensively. Land is the classic example of an immobile resource. Accordingly, it is expected that sectors deriving income from the intensive use of land are likely to lobby against liberalization. Maggi and Rodriguez-Clare (2007) refer to a domestic-commitment problem resulting from the expectation of protection stimulating disproportionate investment in an industry prior to the extraction of the rent by government during negotiations with the industry lobbyists. The government presumably extracts a smaller rent due to the reduction in the expected profits of firms resulting from increased domestic competition, which in turn reduces the share of market and the expected profit for |
