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 politician-level 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.
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Source: Author’s calculation based on the UTAS data
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Notes
Using the same candidate data as this study, Ito (2015) and Kagitani and Harimaya (2017) found a correlation between candidates’ campaign promises on trade policies and their constituency’s economic indicators, such as the intensity of import competing industries. These previous studies differ from the present study in that the causal impacts of import changes have not been examined.
In the U.S. Congress, one-third of the senators are elected every 2 years together with the entire membership of the House of Representatives.
Feigenbaum and Hall (2015), who examined the effects of localized economic shocks on voting on trade bills in the U.S. House, show contradictory results to this view. Under the assumption that incumbents can flexibly change policy positions according to the economic conditions, they reported that incumbents tend to vote by favoring protectionism in response to trade shocks, and this effect is more pronounced in districts where the incumbents are most worried about re-election. However, as their data captured voting behavior in the U.S. Congress, the subjects were limited to incumbents and winners in elections.
The UTAS is conducted by Professor Masaki Taniguchi of the Graduate Schools for Law and Politics, University of Tokyo and the Asahi Shimbun.
Elections for the House of Councilors are held every 3 years because half of them are elected every 3 years while their term in office is guaranteed for 6 years.
Even if the coefficient of interaction term is equal to zero, the interaction effect may be nonzero depending on other covariates (Ai and Norton 2003). As the interaction effect varies according to other covariates, there are variations in the magnitude and statistical significance of the interaction effect.
According to the World Tariff Profiles 2014, Japan’s simple average most favored nation applied a tariff rate of 19% on agricultural products, which is higher than that of the European Union (EU) (13.2%) and the U.S. (5.3%). In particular, the tariff rate on some commodities is extremely high. For example, the tariff on rice is equivalent to 778%, and the tariff on butter is 360%. However, the average tariff rate on non-agricultural products in Japan is 2.6%, which is lower than that of the EU (4.2%) and the U.S. (3.1%).
In the case of a member of the House of Councilors, as the term in office is longer than the House of Representatives, the number of experienced terms is doubled.
The choices are prepared as follows: (1) to appeal to specific people who or organizations that or that have always supported you, (2) to emphasize past achievements, (3) to emphasize ability for government leadership, (4) to emphasize the nature of the leader, and (5) to emphasize your own achievements and nature.
In fact, however, politicians can receive donations from corporations owing to the law that allows free movement of money between a political party and politicians. To some extent, party dummy variables are expected to control for the possible effects of political contributions through this legal loophole.
Column [5] in Table 3 shows that the estimated candidate-level variance component is statistically significant. The results from the likelihood-ratio test indicate that there is significant variability between candidates to support a random-effects ordered logistic regression, rather than a standard ordered logistic regression.
Appendix Table 8 presents the result of interaction effects from the subsample where the candidates answered “Neither.” The main conclusions are maintained.
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Acknowledgements
This study was conducted as a part of the project “Empirical Analysis of Corporate Global Activities in the Digital Economy,” undertaken at Research Institute of Economy, Trade and Industry (RIETI). The author is grateful to the two anonymous referees, the participants at the ETSG 2018 Conference in Warsaw and seminar participants at Aoyama Gakuin University, Keio University, Kyoto University, Kwansei Gakuin University, and RIETI for helpful comments and suggestions. This work is supported in part by Japan Society for the Promotion of Science (JSPS) KAKENHI Grant Number 17K03705.
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Ito, B. Trade exposure and electoral protectionism: evidence from Japanese politician-level data. Rev World Econ 157, 181–205 (2021). https://doi.org/10.1007/s10290-020-00392-0
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DOI: https://doi.org/10.1007/s10290-020-00392-0