A Study of Foreign Trade Policies on Protectionism: A Cluster and Discriminant Approach

Due to different political and economic development stages, every country pursues various political and economic agendas. Therefore, foreign trade policies show various characteristics. We analyze the protectionism of the foreign trade policies of various countries by employing cluster and discriminant analyses. Dealing with the analysis of a nation’s classification, we use observation clustering (Q Clustering). The data are indices which measure national protectionism based on the IMD World Competitiveness Yearbook (from 2001 to 2005). We classify the protectionism policy into three different forms – the high/middle/low protectionism modes. ANOVA indicates the five variables (indices) in the clustering analysis which could better distinguish the differences among clusters. Then, we propose three suitable models to measure the trade policy modes of any country by the two methods: Canonical Discriminant Function and Fisher s linear discriminant functions.