The Political-Economy of U.S. Automobile Protection
Douglas R. Nelson
NBER Working Paper No. 4746
This paper examines the political process through which the U.S. auto industry pursued and ultimately received protection from Japanese competition. Following a brief review of research on the competitiveness of the industry (section II) and on the effects of protection on industry performance (section III), it is not at all obvious that trade protection was the most effective policy response to the industry's economic problems. The remainder of the paper argues that the industry's political strategy reflects a response to a crisis in the political-economic regime regulating relations among the major interests in the U.S. auto industry. To make this argument, section IV develops the notion of a sectoral regime and applies it to the auto industry. Section V develops the argument further suggesting that conditions in the industry constituted a regime crisis and reexamines the industry's pursuit of aggressive trade policy toward Japanese producers in this context. Section VI illustrates the usefulness of this perspective by examining the politics of North American integration from the perspective of the auto industry. Section VII concludes.