The Impact of Trade Liberalization in the Presence of Political Distortions†
研究印度贸易自由化如何减少政治扭曲，发现降低投入品关税能削弱政治关联企业的资源扭曲效应，因为贸易减少了企业对政治家的依赖，从而带来新的贸易收益来源。
Political distortions are prevalent in many developing countries, implying substantial productivity losses. This paper investigates the impact of trade liberalization on political distortions in India. First, using variation in political turnover, we identify that politicians distort resources in favor of politically connected firms. Second, we show that reduced tariffs on input goods significantly decrease the distortionary effect of political connections, as trade reduces firms' dependence on politicians for sourcing inputs. The results suggest a new margin for gains from trade through reduced politically driven misallocation, implying that trade can address a widespread source of productivity losses.