What drives trade policy reform?

Abstract

This paper examines the macroeconomic and political determinants of non-tariff barriers to international trade based on a new index of such restrictions with broad country and time coverage. We employ a structured empirical approach that integrates multiple methodologies to identify which factors are the most robust correlates of trade reform (defined as meaningful changes in non-tariff barriers). We find that structural factors, both macroeconomic (especially inflation and export concentration) and political (especially democracy, corruption, political polarization and populism) emerge as robust correlates of changes in trade policy. Among these, political and institutional variables explain the largest share of nontariff barrier policy variation.