The Political Economy of Trade Policy in Tunisia

Abstract Our paper proposes to establish the political economy determinants of cross-industry distribution of protection in Tunisia in the post-independence period. Instead of the lobbying hypothesis, we assume that the government was seeking legitimacy and to that end, chose import substitution as industrial strategy in order to promote industries with learning potentials but still with a likely concern for tariff proceeds as well as for the rent generation. Following Esfahani (2005)1, we include in the latter motive the need for the government to alleviate risk for groups that have imperfect access to the credit market. The estimation of a simple model for a cross section of 35 Tunisian manufacturing industries in 1997 shows that the industrial distribution of nominal protection in 1997 tended to reflect the special-interests pressures emanating from big, capitalistic firms, supplying consumer goods in the importsubstitution sectors. However, the workers' interests and the government ad hoc growth objectives seem to matter, as well.