Endogenous trade policy: Political struggle in the growth process

Abstract: This paper develops a dynamic theory that accounts for the evolution of trade policy, underlying internal class conflicts, and output growth performance. Analysis of political responses to the distributional effects of international trade reveals that economies with a comparative advantage in manufacturing may reach a developed stage through the ebb and flow of protectionism. This nonmonotonic evolution of trade policy is consistent with the historical experience of Western Europe over the last few centuries. [Copyright &y& Elsevier]