The political economy of trade policy in developing states, 1970-1990: A cross-national, longitudinal analysis

This study explores the political and economic determinants of economic policymaking in developing countries. It does so by employing two different methodologies, a cross-national longitudinal study of trade policy and a comparative case study of Ghana and Bolivia. The cross-national analysis develops a broad, macro-level model of trade policy in nearly 40 developing countries. In doing so, it attempts to span the traditional "levels of analysis" and to test the relative explanatory power of domestic and international variables. Contrary to much of the extant literature this study finds that international factors explain very little. In fact, this study found scant evidence that the international political economy affects the choices of policymakers in a consistent manner; the level of external funding, concentration or dispersion of markets, and the country's export profile had no observable relationship on the country's trade policy. Furthermore, the analysis yielded no consistent cross-national relationship between society-level variables and trade policy.; The structure of state institutions proved to be the most important determinant of trade policy. More specifically, the autonomy and capacity of state institutions consistently accounted for both tariffs and an important nontariff policy, the real exchange rate. With regard to tariffs, the autonomy of the executive branch and the capacity of the state's institutions explain cross-national variation. The autonomy of the central bank predicted the under- or overvaluation of a country' s exchange rate. The case studies extend the findings of the quantitative analysis by exploring the origins of state autonomy and capacity. The political-economic history of Ghana and Bolivia demonstrate how a country's leading economic sector shapes the formation and evolution of state institutions. The central finding of the study is that variation in state institutions, more than international or societal factors, explains the economic policy choices and prospects for development in LDCs.