Political institutions affect trade policy and therefore the country’s development. Country’s domestic structures and institutions can help explain its engagement with the international world. This helps to understand that trade policy links and stands in between political regime, with its electoral system, and the State’s development. WTO (World Trade Organization) has currently 153 members. Some are developed others are developing countries. Some are democratic, others are nondemocratic.
The internal applicability of commonly agreed rules within WTO members, in terms of NTB (non-tariff barrier) rule construction, highly depends on the political regime and it is extremely critical in terms of international cooperation. Political regime would be considered an independent variable while all the other ones are dependent variables because they are affected by the first one. In 1977 the tariff decreased 12% which means that the impact and importance of non-tariff barriers considerably increased.
If it is considered a weapon against competitors to support home products it is also, a weapon that all sort of countries among the 153, either democracies or autocracies, utilize to their own internal purposes: either for economic or political enforcement. One question, obvious but pertinent, is left to answer: if liberalization of barriers leads to a more democratic world. Not necessarily! But the opposite is more likely to be true: the use of NTB from the WTO’s members depends on the internal political forces.
Considering the developing States, Rodrik defends that any change in political regime is likely to induce trade reforms. (Rodrik 1994. ) “Historically sharp changes in trade policy have almost always been preceded (or accompanied) by changes in the political regime. ” From the 30 democracies there were in 1975, to 140 in 2002, it can indicate a strong value in favour of the argument that defends that political and economic reforms are directly connected. “Are democracies more likely to initiate trade liberalizing reforms than autocracies?
” Most probably ten years ago. But today there are successful examples of Countries that keep their autocratic regimes, but are also eager to develop their economy. These countries know they have to open frontiers and socialize with the others if they want to increase exports. They must also be willing to import. And negotiations must start. China is example of such third option. It will not be anymore a certain regime type that would lead to a certain conduct.
So the actual government, the political power the total independent variable, leads the country to a more open, liberal economy, or not, which reflects positively or otherwise, on the country’s development and the level of NTB adopted. The States economic and political development reflects the level of international compromise which has a reflection over the International System. The Effect of Electoral System over the Level of NTB “Electoral laws affect the incentives of policy-makers who determine foreign and economic policy.
” Automatically it reflects the level of NTB adopted by the government. “Further, there are large differences between countries that operate a majoritarian system … and those that operate a more proportional, or PR system. ” In this matter theory and practical experiences are very much connected. The type of electoral system has been linked to political issues, “including the size of government, the provision of public goods, and the government expenditure. ” It doesn’t seem there is clear relationship between the electoral system and the level of trade protection.
PR countries are more open which is probably more related to their size – usually smaller. The Interdependency level and the NTB Level Persistent Studies have been taken place to evaluate the impact of decision making by political institutions in trade liberalization. Most probably the best way to investigate and measure the cause / effect relation is to go back in time and seek how the countries developed from autocracies to democratic and from here to a more liberal trade policy.
Most likely any changes in the political system means further differences in trade policies. As the IMF (International Monetary Fund) pointed out in 1992, (IMF1992) “[s]ince the mid-1980s, there has been a marked shift in the orientation of the trade and industrial policies of most developing countries away from a heavy reliance on direct intervention and inward-looking industrial policies toward less controlled and more export-oriented trade regimes. ” “Countries have chosen to integrate their economies into a global one by dismantling protectionist barriers.
This substantial change in trade policy is historically surprising. ”( Helen Milner Department of Political Science, Columbia University, Why the Move to Free Trade? Democracy and Trade Policy in the Developing Countries, p. 2). So it is also surprising the regional atmosphere the world has felt. The international Community has grown into free Commerce, no doubt. Countries are gathered in strong bows for International Political and Economic Cooperation through International Organizations and Bilateral Relations.
The level of Interdependence grows inevitably which is a very good data element to measure the economic metabolism of the International System. A curious situation in fact is that the world has never been so divided in separate regions, classified by its performance and, to which political and economic space, they belong to. Every region in the world has at least one leading country, and regular levels of trade performance — economic achievement and prosperity—vary widely amongst the regions.
Astonishingly the International Community is spread into International organizations and it is admirable to see the State political power willing to handle, for the first time in history, some of its power to a superior organism. WTO, for example, is an International Organization which creates laws to its members. The Agreement on Technical Barriers to Trade (TBT) is helping to prevent protectionism and regulate NTB measures that the states have the right to use. And to use in the better way possible which will give confidence to the consumers and possibly lead the economy into another larger economic scale.
The cause and effect of both variables in numbers! The cause and effect of both variables firstly can be measured through results: growth of interdependence levels, growth of democracies in the world can be seen through the increase of Exports. Numerical data elements for proof are roughly disorganized, in general. There isn’t a proper consistency in annual coverage of protection measures. But according with some tables bellow, examples from Exports can be evaluated.