The political economy of export restrictions: The case of Vietnam and India

Purpose - To understand the political economy of export restrictions for grain commodities in Vietnam and India. Methodology/approach - Two theoretical models were developed (one for each country) to analyze government policies for export restrictions in Vietnam and India based on price fluctuations. In Vietnam, there was one choice variable - export tariffs. In India, there were two choice variables - export tariffs and procurements. In both cases, the elite were assumed to maximize expected rents. Findings - Export restrictions have become an important feature of trade policy in Vietnam and India and are unlikely to be eliminated in the foreseeable future because to do so would be costly both politically and economically to local elites. The impact of food price increases can be particularly large given the importance of loss aversion. Practical implications - Understanding export restrictions as the outcome of a political-economic calculation is important because it suggests that efforts to limit export restrictions in countries like Vietnam and India are unlikely to be successful.