What accounts for the large reduction in trade barriers among new democracies in Asia after World War II? Using new data from Japan and Thailand, this book provides a surprising answer: politicians, especially party leaders, liberalized trade by buying off legislative support with side-payments such as pork barrel projects. Trade liberalization was a legislative triumph, not an executive achievement. This finding challenges the conventional ‘insulation’ argument, which posits that insulating executives from special interest groups and voters is the key to successful trade liberalization. By contrast, this book demonstrates that party leaders built open economy coalitions with legislators by feeding legislators’ rent-seeking desires with side-payments rather than depriving their appetites. This book unravels the political foundations of open economy.
‘In this important book, Naoi refocuses the debate on trade politics to pay serious attention to the role of politicians. She argues that political leaders (such as prime ministers) use their control over government resources to shape and mobilize support for their desired trade legislation. It is a great contribution to studies of trade and globalization.’ Margarita Estevez-Abe, Maxwell School, Syracuse University, New York
‘Naoi offers a novel view of how countries achieve trade liberalization. Most books do well to challenge at least one conventional wisdom, but Naoi successfully challenges at least three of them. First, the book refutes the common notion that legislators have limited policy-making autonomy and never deviate from their district’s interests. Second, the book questions whether compensation strategies occur only in response to the needs and demands of firms or voters hurt by liberalization. Third, compensation strategies that buy support for liberalization can take a wide variety of forms not considered by previous research on this topic, such as subsidies, public work projects, personnel appointments, and even institutional reform. This books promises to make a significant contribution to our understanding of the political foundations of an open economy.’ Nita Rudra, Georgetown University, Washington DC