Gawande, KishoreHoekman, BernardCui, Yue2012-03-192012-03-192011-10-01https://hdl.handle.net/10986/3628The collapse in trade and contraction of output that occurred during 2008-09 was comparable to, and in many countries more severe than, the Great Depression of 1930, but did not give rise to the rampant protectionism that followed the Great Crash. Theory suggests several hypotheses for why it was not in the interest of many firms to lobby for protection, including much greater macroeconomic "policy space" today, the rise of intra-industry trade (specialization in specific varieties), and the fragmentation of production across global value chains ("vertical" specialization and the associated growth of trade in intermediates). Institutions may also have played a role in limiting the extent of protectionist responses. World Trade Organization disciplines raise the cost of using trade policies for member countries and have proved to be a stable foundation for the open multilateral trading system that has been built over the last fifty years. This paper empirically examines the power of these and other theories to explain the observed pattern of trade policy responses to the 2008 crisis, using trade and protection data for seven large emerging market countries that have a history of active use of trade policy. Vertical specialization (global fragmentation) is found to be the most powerful economic factor determining trade policy responses.CC BY 3.0 IGOAGRICULTURAL PRODUCTSAGRICULTUREANTI-DUMPING INVESTIGATIONSANTIDUMPINGANTIDUMPING DUTIESAPPLIED TARIFFAVERAGE TARIFFBARRIERS TO TRADEBILATERAL IMPORTSBILATERAL TARIFFBILATERAL TARIFFSBILATERAL TRADEBILATERAL TRADE DATACOMMERCIAL POLICYCOMPARATIVE ADVANTAGECOMPETITIVE POSITIONCOMPETITIVENESSCONSTANT RETURNS TO SCALECONSUMERSCOUNTRY OF ORIGINCURRENCYCURRENCY APPRECIATIONCURRENT ACCOUNTCUSTOMSCUSTOMS UNIONSDEBTDEMAND ELASTICITIESDEMAND ELASTICITYDEMOCRATIC SOCIETIESDEVALUATIONDEVELOPED COUNTRIESDEVELOPING COUNTRIESDEVELOPMENT POLICYDISPUTE SETTLEMENTDOMESTIC CONSUMERSDOMESTIC INDUSTRIESDOMESTIC MARKETDOMESTIC PRODUCERSDOMESTIC PRODUCTIONDOMESTIC SUPPLIERSECONOMETRIC MODELSECONOMIC OBJECTIVESECONOMIC POLICYECONOMIC RESEARCHECONOMIC THEORYELASTICITY OF TRADEEMERGING MARKETEXCHANGE RATESEXPORT COSTSEXPORT CREDITEXPORT CREDIT INSURANCEEXPORT MARKETSEXPORT SUPPLYEXPORTERSEXPORTSEXTERNALITYFINAL GOODSFINANCIAL CRISISFIXED COSTSFOREIGN COUNTRIESFOREIGN DIRECT INVESTMENTFOREIGN FIRMFOREIGN FIRMSFOREIGN MARKETFOREIGN PRODUCERSFOREIGN PRODUCTSFREE TRADEFREE TRADE AGREEMENTFREE-TRADE AGREEMENTSFUTURE RESEARCHGDPGLOBAL TRADEGLOBAL TRADINGGLOBALIZATIONGROSS EXPORTSGROSS OUTPUTHIGH TARIFFSHOME COUNTRYHOME GOVERNMENTHOME GOVERNMENTSHOME TARIFFSHUMAN CAPITALIMPERFECT COMPETITIONIMPORT PENETRATIONIMPORT PROTECTIONIMPORT QUOTASINCREASING RETURNSINDUSTRIAL POLICYINDUSTRIAL PRODUCTIONINDUSTRY TRADEINPUT-OUTPUT TABLESINTERMEDIATE GOODSINTERMEDIATE INPUTSINTERNATIONAL ECONOMICSINTERNATIONAL RULESINTERNATIONAL TRADEINVESTOR CONFIDENCELEVEL OF PROTECTIONLIBERALIZATION OF TRADELIQUIDITYLIQUIDITY CONSTRAINTSLOBBYINGLOW INTEREST RATESMACROECONOMIC POLICIESMARKET ACCESSMEMBER COUNTRIESMEMBER GOVERNMENTSMERCANTILISMMONETARY POLICIESMONETARY POLICYMONOPOLISTIC COMPETITIONMONOPOLYMULTILATERAL LIBERALIZATIONMULTILATERAL NEGOTIATIONMULTILATERAL TRADEMULTINATIONAL CORPORATIONSMULTINATIONAL FIRMSNATIONAL BUREAUNATIONAL TREATMENTOPEN MARKETSOPEN TRADEOPTIMAL TARIFFOPTIMAL TARIFFSPATTERN OF TRADEPERFECT COMPETITIONPOLICY RESPONSESPOLITICAL ECONOMYPREFERENTIAL RATEPREFERENTIAL RATESPREFERENTIAL TARIFFPREFERENTIAL TARIFFSPREFERENTIAL TRADEPREFERENTIAL TRADE AGREEMENTPREFERENTIAL TRADE AGREEMENTSPRICE COMPETITIONPRICE OF IMPORTSPRODUCTION INCREASESPROTECTION DATAPROTECTION FOR SALEPROTECTIONISMPROTECTIONISTPROTECTIONIST PRESSURESREAL EXCHANGE RATERECIPROCITYREGIONAL TRADEREGIONAL TRADE AGREEMENTSREGULATORY POLICIESRISK PREMIUMRULES OF NEGOTIATIONSAFEGUARD ACTIONSSAFEGUARD MEASURESSPECIALIZATIONSPECIFIC COMMITMENTSTARIFF BINDINGSTARIFF COMMITMENTSTARIFF DATATARIFF EQUIVALENTTARIFF INCREASETARIFF INCREASESTARIFF LEVELSTARIFF LINESTARIFF ON IMPORTSTARIFF POLICIESTARIFF POLICYTARIFF PREFERENCESTARIFF PROTECTIONTARIFF RATETARIFF RATESTARIFF REVENUETARIFF STRUCTURETERMS OF TRADETRADE AGREEMENTSTRADE ALERTTRADE BARRIERSTRADE CONCESSIONSTRADE COOPERATIONTRADE COSTSTRADE DISTORTIONSTRADE EFFECTSTRADE EXTERNALITIESTRADE FLOWSTRADE MODELSTRADE POLICIESTRADE POLICYTRADE POLICY INSTRUMENTSTRADE POLICY REVIEWTRADE POLICY REVIEW MECHANISMTRADE REFORMSTRADE RELATIONSHIPSTRADE RESTRICTIONSTRADE ROUNDSTRADE VOLUMESTRADE WARSTRADING PARTNERSTRANSPORT COSTSUNEMPLOYMENTUNEMPLOYMENT RATESUNILATERAL LIBERALIZATIONURUGUAY ROUNDVALUE ADDEDVALUE OF TRADEVERTICAL SPECIALIZATIONWELFARE GAINSWORLD TRADEWORLD TRADE ORGANIZATIONWORLD TRADING SYSTEMWTOZERO TARIFFSZERO ­ TARIFFSWorld Bank10.1596/1813-9450-5862