Trade (GATT), the Uruguay Round, in 1994 further liberalized trade among many developed countries and between them and developing ones. This global “rush to free trade,” as Rodrik (1994) has called it, is an anomaly politically. As he describes it (1994:62), “Since the early 1980s, developing countries have flocked to free trade as if it were the Holy Grail of economic develop- ment.… Together with the historic transformation and opening of the Eastern European economies, these developments represent a genuine revolution in policymaking. The puzzle is why is it occurring now and why in so many coun- tries all at once?” The purpose of this essay is to ask whether and how the exist- ing theories we have about trade policy can explain this puzzle.
The scholarly literature on international trade is vast. Both economists and political scientists have contributed much to it, as recent surveys by econo- mists such as Reizman & Wilson (1995) and Rodrik (1995) and political scien- tists such as Cohen (1990) and Lake (1993) demonstrate. But their approaches have tended to differ. Economists have focused on explaining trade flows. Why certain countries import and export particular goods or services to certain other countries has been a central question for them. Much theory in interna- tional trade addresses this question; for instance, one of the central theorems in trade theory, the Heckscher-Ohlin theorem, explains trade flows. Economists have also devoted attention to the issue of trade barriers. The central theoreti- cal conclusion of the field, of course, has been that free trade is the best policy for most countries most of the time. Thus, economists have puzzled over why, given this finding, countries invariably employ at least some protectionist poli- cies. They have tended to ask why countries protect certain of their industries when free trade would be better economically. By and large, their answer has focused on the preferences of domestic actors for protection. Using the Stopler-Samuelson theorem and other economic theories, they have explored why certain domestic groups would prefer protection and why they would ex- pend resources to lobby for it. This has resulted in a large empirical literature examining levels of protection across industries and, recently, in the develop- ment of models of such protection. Ultimately, then, economists have been pushed into studying the politics of trade. How well have they done in model- ing such politics? Moreover, have they been able to explain the rush to free trade that has occurred?