Who Wants to Globalize? Consumer Tastes and Labor Markets in a Theory of Trade Policy Beliefs

ABSTRACT

Although the allure of consumption is the engine of globalization, political economists have tended to ignore varying consumer tastes as a potential source of beliefs about trade policy. This article develops a theory of trade policy preferences that adds the notion of varying consumer tastes to the standard labor-market application of the Heckscher-Ohlin trade model. The theory, which can explain trade preferences both across individuals and countries, is supported by an empirical analysis of survey data from 41 nations. Heavy consumers of exportables are found to be more protectionist than heavy consumers of imports and import-competing goods. Moreover, citizens in countries with expensive tradable goods see trade liberalization as a remedy to the rents they pay for protectionism. Other findings also support the more conventional labor-market side of the Heckscher-Ohlin model.