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International Trade and Finance

Notes characterized by high tariff levels are likely to be sufficiently well-protected that they need not
supplement tariffs with NTBs. Our findings suggest the possibility that many of the tariff
reductions made by the GATT during the Tokyo Round may not have had the intendeds effect
of reducing protection. Instead, these cuts seem to have produced countervailing increases in
the incidence of NTBs.
• In addition to the implications of this study, it is also important to address its limitations. One
limitation of this sort concern the available data on NTBs. While the coverage ratios on which
we relied are viewed by many as the best data of their kind, NTBs are inherently difficult to
measure. Further, these data are available for only a few years during the 1980s, and the
determinats of NTBs may vary over time. Another limitation concerns the sample of states that
was analyzed.
10.6 Key-Words

1. Political economy : The study and use of how economic theory and methods influences
political ideology. Political economy is the interplay between economics,
law and politics, and how institutions develop in different social and
economic systems, such as capitalism, socialism and communism. Political
economy analyzes how public policy is created and implemented.
2. Non-Terrif Barriers : A form of restrictive trade where barriers to trade are set up and take a
form other than a tariff. Nontariff barriers include quotas, levies,
embargoes, sanctions and other restrictions, and are frequently used by
large and developed economies.
10.7 Review Questions

1. What do you mean by political economy? Discuss.
2. Discuss the societal approach to trade policy.
3. What are the effects of the interaction between societal and statist factors? Explain
Answers: Self-Assessment

1. (i)(a) (ii)(d) (iii)(b) (iv)(c) (v)(b)
(vi)(a) (vii)(b)
10.8 Further Readings

1. Evans, G., Newnham, J., Dictionary of International Relations; Penguin Books,
1998.
2. Filanlyason, J., Zakher M., The GATT and the regulation of Trade Barriers: Regime
Dynamic and Functions; International Organization, Vol. 35, No. 4, 1981.
3. Frieden, J., Lake, D., International political economy: perspectives on global power
and wealth, London: Routledge, 1995.
4. Mansfield, E., Busch, M., The political economy of Non-tariff barriers: a cross
national analysis; International Organization, Vol. 49, No. 4, 1995.
5. Oatley,T., International political economy: interests and institutions in the global
economy; Harlow: Longman, 2007.

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