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The increase in investment abroad during the past two decades may help explain the simultaneous worldwide rush toward free trade. The entry of foreign capital may change the political game, increasing openness to international trade no matter what form the foreign capital takes (whether entering...
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endogenous determination of trade protection through lobbying - where the government is also concerned about income … foreign capital enters the export or import-competing sectors).There will either be increased counter-lobbying for protection … by the export sector or reduced lobbying for protection in the import-competing sector, because of the scale effect …
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In this paper we examine the empirical relevance of three prominent endogenous protection models. Is protection for sale, or do altruistic policy makers worry about political support? We find strong evidence that protection is indeed for sale. The important new result is, however, that not only...
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