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Empirical Studies of Strategic Trade Policy

Since the 1980s, economists have used the concept of strategic trade policy, which takes account of imperfect competition and increasing returns in the international marketplace, to criticize conventional views about free trade. According to the new view, a government can take strategic steps to raise its income at another country’s expense—by subsidizing exports or erecting trade barriers, protecting certain firms from foreign competition, or promoting the development of new industries. This volume looks at the experience of specific industries in order to determine the effectiveness of strategic trade policy in promoting economic growth.

The nine papers cover the U.S. and European auto industries, the U.S. steel industry, the commercial aircraft industry, airline deregulation in Scandinavia, and labor and industrial policy in Korea and Taiwan. The authors refine the basic techniques for measuring policy effectiveness, extend them to encompass industry dynamics, and test the implications of new trade models.

International economists and trade experts in government and business will find important new insights into the role of strategic trade policy in international competitiveness.

251 pages | 20 line drawings, 52 tables | 6 x 9 | © 1994

National Bureau of Economic Research Project Report

Economics and Business: Economics--International and Comparative

Table of Contents

Introduction by Paul R. Krugman
1. The Non-Optimality of Optimal Trade Policies: The U.S. Automobile Industry Revisited, 1979-1985
Kala Krishna, Kathleen Hogan, and Phillip Swagel
Comment: Garth Saloner
2. Trade Policy Under Imperfect Competition: A Numerical Assessment
Anthony J. Venables
Comment: David G. Tarr
3. Strategic Trade Policy in the European Car Market
Alasdair Smith
Comment: James Levinsohn
4. Deregulation of Scandinavian Airlines: A Case Study of the Oslo-Stockholm Route
Victor D. Norman and Siri P. Strandenes
5. Industrial Policy in the Transport Aircraft Industry
Gernot Klepper
Comment: Heather A. Hazard
6. Trade and Industrial Policy for a ’Declining?’ Industry: The Case of the U.S. Steel Industry
Richard G. Harris
7. Strategic Manpower Policy and International Trade
David Ulphand and L. Alan Winters
8. Industrial Organization and Product Quality: Evidence from South Korean and Taiwanese Exports
Dani Rodrik
9. Import Surveillance as a Strategic Trade Policy
L. Alan Winters
Comment: James E. Anderson

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