What Determines Firm Trade Policy Preferences?

Abstract

This thesis provides some new evidence on the determinants of firm level trade policy preferences. Using a firm and country level data set covering middle and low-income countries between the years of 2006 and 2010, this study finds results consistent with a Ricardo-Viner (RV) model of trade policy preferences in which a firm forms preferences based on the export-orientation of its business, conditional on the trade openness of its country. As trade openness increases, export-oriented firms are more likely to approve of their host country's trade policy, while import-competing firms are more likely to oppose it. For governments, the policy implications of this study are broad. Most importantly, the results of this study lead to a potential for governments to efficiently shape trade policy in order to more accurately reflect the interests of their industries and firms.