Welfaremindedness in Trade Policy Decision Making Process: A Qualitative and Quantitative Analysis from Developing Nations

Abstract

The proposition of free trade has been one of the most important tenets of economists for the past two centuries. They have been of the view that free trade will be in benefit of nations in most of the cases. But “new trade theory” and “infant industry argument” does not support this principle of trade. Therefore now economists are trying to seek out not only economic rather political determinants of protection in nations. So this study has basically tried to see how government maximizes welfare of the society in designing trade policies specifically in developing countries. Moreover the whole developing region has been divided regime wise, domestic institutional wise and  income wise. Both quantitative and qaualitative analysis has been performed. Grossman Helpman model has been employed for estimating these welfare estimates. Time span of the study is from 1995-2010. And GTAP7 has been used for extracting data for intermediate inputs. Welfare mindedness has been calculated with lobby and without lobby formation in an economy. Results are very much close to the present world scenario that more rich and democratic nations are more welfare concerned than poor and autocratic nations. More over parliamentary democracies proved more welfare oriented than presidential democracies.