Foreign Lobbies and US Trade Policy

By Kishore Gawande, P. Krishna, Michael J. Robbins. 2004

126 citations recorded by the source corpus.

In popular discussion much has been made recently of the susceptibility of government policies to lobbying by foreigners. The general presumption has also been that such interactions have a deleterious effect on the home economy. However, it can be argued that, in a trade policy context, bending policy in a direction that would suit foreigners may not in fact be harmful: If the policy outcome absent any lobbying by foreigners is characterized by welfare-reducing trade barriers, lobbying by foreigners may result in reductions in such barriers and raise consumer surplus (and possibly improve welfare). Using a new data set on foreign political activity in the US, this paper investigates the relationship between trade protection and lobbying activity empirically. The approach taken in this paper is primarily a structural one. To model the role of foreign and domestic lobbies in determining trade policy, we develop first a theoretical framework building on the well-known work of Grossman and Helpman (1994); the econometric work that follows is very closely linked to the theory. Our analysis of the data suggests that foreign lobbying activity has significant impact on trade policy - and in the predicted direction: Tariffs and non-tariff barriers (NTBs) are both found to be negatively related with foreign lobbying activity. We consider also extended specifications in which we include a large number of additional explanatory variables that have been suggested in the literature as determinants of trade policy (but that emerge from outside of the theoretical structure described above) and confirm the robustness of our findings in this setting.

View Paper: https://www.semanticscholar.org/paper/62d7971f5a9f11ee01525edf4a9481c5ab50ce05

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Citations in the corpus

Global Supply Chains and Trade Policy Responses to the 2008 Crisis (2015, background): “The second source of anti-protectionism is foreign lobbying (e.g., Gawande, Krishna, and Robbins 2006) by exporters in countries that are dependent on the source country to supply them with the intermediate inputs.”
Institutionalized pollution havens (2009, background): “Finally, Gawande et al. (2004) provide evidence of lobbying by foreign firms in the US that resulted in reductions in US trade barriers. al.”
Advancing the Empirical Research on Lobbying (2014, background): “…to show that lobbying affects tariffs, customs classifications, and dumping determinations across a wide variety of countries (Grasse & Heidbreder 2011; Gawande et al. 2006, 2012; Stoyanov 2009; Ehrlich 2008; Drope & Hansen 2004; Baylis & Furtan 2003; Tung 2011; Tavares 2006; Lee & Baik 2010).”