Trade exposure and electoral protectionism: evidence from Japanese politician-level data
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Trade exposure and electoral protectionism: evidence from Japanese politician‑level data Banri Ito1
© Kiel Institute 2020
Abstract This study empirically examines the causal impact of economic shocks of trade on trade policy positions by candidates who run for national elections using politicianlevel data of Japan during the period from 2009 to 2014. The focus of this research is an examination of how the influence of trade shocks, measured by import competition with China on politicians’ trade policy stance, is related to election pressure. The results revealed that an increase in import exposure deters candidates from supporting trade liberalization, even after considering offset by export exposure. Among other points, this protectionist effect is more pronounced for challengers than for incumbents, and for candidates who run for the Lower House election and are exposed to stronger pressures of elections than those who run for the Upper House election. Taking these findings into account, politicians who face trade shocks tend to appeal to protectionist trade policies as the pressures of elections become stronger. Keywords Trade policy · Protectionism · Election · Electoral competition JEL Classification D72 · F13
1 Introduction Why do politicians endorse protectionist trade policies during election campaigns? Prior international economics literature has pointed out the role of economic conditions in constituencies in determining their trade policy stance. Economic variables such as constituencies’ skill endowments and industry compositions, are motivated by theoretical predictions (Magee 1980; Irwin 1994; Kaempfer and Marks 1993; Baldwin and Magee 2000; Beaulieu 2002) as well as campaign contributions based * Banri Ito [email protected] 1
College of Economics, Aoyama Gakuin University, 4‑4‑25 Shibuya, Shibuya‑ku, Tokyo 150‑8566, Japan
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on political economic considerations centered on the trade policy for sale model (Grossman and Helpman 1994; Baldwin and Magee 2000; Devault 2010). Recent studies have attempted to elucidate the impact of the rapidly increasing import from China on domestic policy formation (Feigenbaum and Hall 2015; Autor et al. 2016; Che et al. 2016; Jensen et al. 2017). Simultaneously, some studies have suggested that the pressure of elections is one of the causes for a politician’s protectionism (Conconi et al. 2014; Ito 2015). A politician may change their policy stance when placed in a challenging situation in elections. This study attempts to contribute to the literature by empirically examining how the effect of trade shock on a politician’s trade policy horizon is related to electoral pressures proxied by the politician’s observable attributes based on survey data of candidates who ran for national elections in Japan in the period of 2009–2014. Studies on the impact of rising import exposure from China on the labor market find significant job losses in manufacturing in the United States of America (the U.S.) (Autor et al. 2013; Acemoglu et al.
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