10: Political Economy and International Trade

Trade policy analysis is often conducted from the implicit vantage point of a benevolent dictator poised to choose the best policies for a country. However, decisions about which policies to apply are rarely made by a sovereign but instead are usually made via a democratic political process. Whenever we consider how the political process affects economic decision making, we call it political economy.

The political economy aspects of trade policymaking are studied briefly in this chapter. Most important is how the concentrations and dispersion of the costs and benefits of trade policies tend to affect the decisions.

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