Essays in Honour of Peter Lloyd, Volume II
Edited by Sisira Jayasuriya
Chapter 1: Globalization and the political economy of international trade policy
1. Globalization and the political economy of international trade policy Arye L. Hillman* INTRODUCTION In the years that have spanned Peter Lloyd’s career, changes have taken place both in the conduct of international trade policy and in the normative views expressed about trade policy. This chapter provides an overview of these changes. In considering the changes (or lack of change), I shall be concerned with political economy, or the interface between economic outcomes and political or collective decisions. Political economy will enter in two parallel ways. As a concept of positive economics, political-economy perspectives describe why governments have chosen policies. Politicaleconomy perspectives are also part of the broad normative theme of why free trade may or may not be regarded as desirable. A consideration of political economy from these perspectives reveals changes that have taken place in the periods before and after globalization, and also sustained consistencies regarding normative views of government. Normative views of government underlie how government is described in economic models, and the expectations we have of government. The normative principle can be that governments are means for social and economic improvement through appropriate policies. Such a normative view can be stated without regard for the limitations that might be present on government. The limitations include information and problems of majority voting or other means of making collective decisions. Electoral objectives and the need for political support also introduce principal–agent problems between government and voters or the public at large. If the limitations on expectations of...
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