Social Preferences for the Margins of Trade

• In Event: Trade Preferences in Developing Countries

Abstract

Existing IPE work analyzes why do individuals prefer more or less openness, this is, the intensive margin of trade. While different trade models (i.e., factors, sectors, or heterogeneous firms) help to derive predictions for openness vs. autarky, they are also uninformative about demands for different forms of integration to the trade network.

Here, I argue that social preferences for trade policy depend on different combinations of trade diversification and exposure (in both exports and imports). First, voters may have not only preferences for openness but also for product and export destinies diversification and product and import destinies diversification. Second, these preferences may depend on perceptions about potential risks and gains from different integration profiles to the world markets.

This is the first systematic analysis of social preferences on the intensive and extensive margins of trade. I present evidence of a pilot study and a detailed pre-analysis plan for conducting conjoint survey experiments in 15 Latin American countries. I analyze preferences for a wide range of alternative trade profiles and how do they vary across skills, economic sectors, type of firms in which individuals are employed, and the so-called "love for variety". The design goes beyond measuring and describing preferences, by embedding the conjoint studies within different perception elicitation treatments about risk and gains from the margins of trade. Therefore, the study also allows to estimate how variable are multidimensional trade preferences given changes in the perception of consequences from different types of trade.

Finally, the study includes different outcome variables. Besides the preferences for margins of trade, I also look at other outcomes such as demands for protection and compensation. In that sense, my research also speaks to the trade-welfare nexus by disentangling the effects of trade margins on demands for protection.

Author

• Santiago López-Cariboni, Universidad Católica del Uruguay