Factors affecting the use of fiscally protectionism instruments used in international trade

Abstract

Depending on the developments in the world, the presence of the state in the economy also changes. In the economic welfare periods, minimal state view is adopted, while in the periods of contraction and crisis the interventionist state view is adopted. The international trade system is also affected from this. In the periods when the minimal state view was adopted, the free trade system was the dominant paradigm and in the periods when the interventionist state view was adopted, protectionism was the dominant paradigm. These developments are shaped by the nation-states, which are the hegemonic power of the period. Such countries act with the discourse of "insinde Keynes outside Smith", and on the one hand, do not hesitate to apply protectionist policies while making liberalization discourses around the world. Although the international trade system is based on the free trade system, protectionist policies are also implemented. In this context, protectionist instruments which allow World Trade Organization to use under certain constraints are used. These instruments can be grouped into two groups as protectionist instruments that are fiscally and non-fiscally qualified in terms of the effects they create in public finances. In this study, the factors affecting the use of fiscally protectionist instruments in international trade are analyzed on the basis of countries by negative binomial regression analysis. In this study, the data set of 16 countries covering the years 1995-2016 is used. While fiscally protection instruments are used for individual interests instead of macroeconomic targets by developed countries, they are predominantly used for macroeconomic targets by the low and middle-income countries.