Race-to-the-bottom tariff cutting

This paper provides an empirical assessment of race-to-the-bottom unilateralism. It suggests that decades of unilateral tariff cutting in Asia‟s emerging economies have been driven by a competition to attract FDI from Japan. Using spatial econometrics, I show that tariffs on parts and components, a crucial locational determinant for Japanese firms, converged across countries following a contagion pattern. Tariffs followed those of competing countries if the latter were lower, if FDI jealousy was high, and when competing countries were at a similar level of development.

Publication infos:
Geneva, The Graduate Institute of International and Development Studies, 2010
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Number of pages:
19 p.
HEID Working Paper ; 12/2010

 Record created 2011-08-09, last modified 2019-09-03

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