Global trade and trade protection in a globalised world

While the World Trade Organisation and Regional Trade Agreements work for boosting the global trade, trade protection remains prevalent. This contradiction took a new turn during the 2007/2008 global financial and economic crisis. There has been an argument that trade protectionist activities are influenced by diverse factors, including social, economic and institutional factors. This study examines what determines trade protectionist actions, taking into consideration some macro-economic variables. The data were sourced from the Global Trade Alert and World Development Indicators. The authors find that a country's level of economic growth is not a crucial factor for engaging in trade protection. It is also interesting that as a country's institutional quality improves, there might be the less protectionist tendencies. This implies that a country's magnitude of protection is determined by its level of institutional development. The other finding includes that the more a country trades, the higher its tendency to protect.